1. Explain what carrying costs of inventory are and give some examples.

2. Explain how carrying costs are related to inventory turnover.

3. Explain what "stock out" costs are and how that is related to inventory turnover.

4. What happens if you make your average collection period too low?

5. What is another name for average collection period (ACP)?

6. What happens to a company's profit margins if the cost of their input suddenly rises?

7. What does it mean if your current ratio is high, but your quick ratio is low?

8. Explain what it means if a company has a high total asset turnover.

9. What kind of companies are "capital intensive"? What does that mean? Can you think of some examples? If a company is very capital intensive, how does that affect its asset turnover?

10. How does a high asset turnover affect profitability?

11. Is it optimum to have a debt ratio of o?