- Return on assets will likely differ across firms and across time. Three elements of risk that will
help explain these differences are _______________, _________________________, and stage
and length of product life cycle
operating leverage , cyclicality of sales
- Return on assets can be a misleading ratio when analyzing technology firms because two
important assets, ______________________________ and
______________________________ do not appear on their balance sheets
their employees; their technologies
- One problem with using EPS as a measure of profitability is that it does not consider the
amount of ____________________ or ____________________ required to generate a
particular level of earnings.
assets, capital
- Short-term ____________________________ measures represent a firm's near-term ability to
generate cash to service working capital needs and debt service requirements.
liquidity risk
- Long-term ______________________________ measures represent the longer-term ability of
the firm to generate cash internally or from external sources to satisfy plant capacity and debt
repayment needs.
solvency risk
- _________________________ is not a measure of long-term solvency risk?
Operating Cash Flows to Current Liabilities Ratio
- Cash flow hedges are derivative instruments acquired to hedge exposure to variability in
___________________ .
expected future cash
- Fair value hedges are derivative instruments acquired to hedge exposure to changes in the fair
value of ____________________.
Assets or Liabilities
- When firms use _____________ effectively to_____________, the net gain or loss each period
should be relatively small.
derivatives , manage risk
- Firms in ___________________ bankruptcy are relived from debt obligations unlike firms in
Chapter 7 bankruptcy.
restructuring
