1- Why might a company decide not to pay out all of its free cash flow in dividends?

1. he company may need to purchase more inventory due to strong sales demand.

2. The company may want to buy a competitor.

3. The company may need to repair or replace some existing equipment.

4. Management may have decided that employees need a raise

2- Of the following, which ratio would be the best ratio to judge the financial leverage of a firm?

1. Debt-to-equity ratio

2. Times interest earned

3. Net debt to free cash flow

4. Debt ratio

3- What does a falling account receivable turnover ratio mean?

1. Management is becoming more efficient in managing collections.

2. Net sales are growing faster in relation to accounts receivable.

3. The amount of money needed to fund working capital is growing.

4. Accounts receivable will a source of cash on the cash flow statement

4- The Securities and Exchange Commission's main goal with a prospectus is to:

1. insure investors that it is a legitimate company.

2. make sure full disclosure to investors has been made.

3. identify for investors the fair value of the company.

4. identify companies that do not have the proper capital structure