1. The inventory turnover ratio measures:

a.	When a company needs to purchase more inventory
b.	How many days it takes to sell inventory
c.	How many times a year a company sells all its inventory
d.	The amount of inventory sold on credit terms

2. Which financial ratio measures the companys ability to pay its bills?

a.	Debt ratio
b.	Market to book ratio
c.	Current ratio
d.	Times interest earned

Short Answer (Points as noted)

3. (5 pts.) Is a companys stock price always equal to its intrinsic value? Why or why not?

4. (5 pts.) Explain free cash flow and how it relates to company investment decisions.

5. (8 pts.) State four different reasons why financial ratio analysis has limited value in assessing company performance.

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