1. Which one of the following is a use of cash?

payment received from a customer on his or her account

sale of inventory to a cash customer

payment to a supplier

sale of common stock

decrease in accounts receivables

2. Cassandra's has 6,100 shares outstanding at a market price per share of $24. Adrian's has 3,500 shares outstanding at a market price of $56 a share. Neither firm has any debt. Adrian's is acquiring Cassandra's for $155,000 in cash. The incremental cash flow generated by the acquisition is $2,250 each year forever. The discount rate is 10%. What is the value of Cassandra's to Adrian's?

$158,200

$155,000

$168,900

$146,400

$132,500

3. Based on the DuPont Analysis, which one of the following reasons can be behind an observed deterioration in shareholders profitability?

Sales are too high relative to assets

Too much equity is used in capital structure

Net income is too high relative to sales

Net income is too high relative to assets

There is too much debt relative to equity