1. Rainer Inc. has fixed costs of $2,000,000, including depreciation of $300,000. The EBITDA is $1,250,000. Calculate the cash flow operating leverage. What does this mean?

2. Roadrunner Trucking earns $4.50 per mile. Variable cost per mile is $2.50. Fixed costs are $1,000,000 including depreciation of $350,000. Compute the cash breakeven in miles.

3. Below is the long-term and capital section of the balance sheet of Mt. Rushmore Mining Co.:

Category	Value
Notes Payable	$6,000,000
Bonds Payable	1,000,000
Preferred Stock	500,000
Common Stock	6,000,000
Retained Earnings	5,000,000

Interest of notes is 10%, bonds payable 8%, preferred stock dividends are 5% and common shareholders opportunity cost is 25%. Tax rate is 30%. Compute the average weighted cost of capital.

4. Spokane Company uses a lock box in Seattle. They process $300,000 in checks a day, and the average check size is $250. The process saves two days in float and one half-day in processing. The bank charges 15 cents per check. There are 270 business days in the year. The company figures it costs them 4% to carry the accounts receivable. Which method is better: lock box or carrying the accounts for an extra 2.5 days?

5. The cost of goods sold is $3,500,000, and accounts payable are $500,000. Compute the days in accounts payable.

6. Sales on account are $8,000,000, and accounts receivable are $3,000,000. Calculate the days outstanding.

7.The cost of goods sold is $2,000,000, and inventory is $500,000. Calculate the days on hand.