Return on assets will likely differ across firms and across time

1. 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

2. 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

3. 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

4. Short-term ____________________________ measures represent a firm's near-term ability to
   generate cash to service working capital needs and debt service requirements.

liquidity risk

5. 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

6. _________________________ is not a measure of long-term solvency risk?

Operating Cash Flows to Current Liabilities Ratio

7. Cash flow hedges are derivative instruments acquired to hedge exposure to variability in
   ___________________ .

expected future cash

8. Fair value hedges are derivative instruments acquired to hedge exposure to changes in the fair
   value of ____________________.

Assets or Liabilities

9. When firms use _____________ effectively to_____________, the net gain or loss each period
   should be relatively small.

derivatives , manage risk

10. Firms in ___________________ bankruptcy are relived from debt obligations unlike firms in
    Chapter 7 bankruptcy.

restructuring