Question
Suppose 10 years ago you invested $1,000 in a stock that has not paid any dividends. Which return number should be more important to you,
Suppose 10 years ago you invested $1,000 in a stock that has not paid any dividends. Which return number should be more important to you, the arithmetic average return or the geometric average return? Why? In this case, does the order of the 10 annual returns impact the arithmetic return or geometric return? If so, how? If not, why not?
A retail store has days' sales in inventory of 30 days and an average collection period of 10 days. The firm pays its suppliers in an average of 45 days. Taken together, what do these average values imply about the firm's operations and its cash flows?
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