Refer to the text page 597(10th Edition) to answer Q1 and Q2. Answer length for

Question

Refer to the text page 597(10th Edition) to answer Q1 and Q2. Answer length for each question: one-half to one-page, single spaced.

Q1. Why is Amazon's cash cycle so much shorter than that of competitor Barnes & Noble ? How does this comparison affect financial management decisions of other retailers ?

Q2. How does Boeing achieve a cash cycle of negative 100 days ?

Q3. Define the following terms as they apply to our work in FIN 201...in ten words or less: 1.capital structure 2.working capital 3.assets 4.liabilities 5.retained earnings 6.liquidity 7.leverage 8.Sarbanes-Oxley 9.GAAP 10.market value versus book value 11.depreciation 12.straight-line versus accelerated depreciation 13.solvency 14.profitability 15. pv 16.fv 17.PVA 18.FVA 19.simple interest 20.compound interest 21.discount rate 22.Rule of 72 23.annuity 24.required return formula 25.NPV 26.NPV decision rule 27.payback 28.IRR 29.formula for cost of equity 30.formula for cost of debt 31.WACC 32.credit facility 33.venture capital 34.operating cycle 35.inventory period 36.accounts receivable period 37.cash cycle 38.profit margin 39.ROE 40. debt/equity ratio.

Explanation / Answer

Q1. Why is Amazon's cash cycle so much shorter than that of competitor Barnes & Noble ? How does this comparison affect financial management decisions of other retailers ?

1.a ) Amazon is a much larger company than B&N. Currently, they're a much healthier one too. B&N has been on the rocks for a long time and failed to make headway in international markets with their Nook ereaders.

This doesn't fully explain everything. The best answer I can give is because Amazon is a much larger company with diversified products.

B&N is best known for selling books, games, and minor accessories. Amazon sells practically everything.

B&N has declined in recent years largely because the print book market is drying up. Ereaders and used bookstores have been driving this.

Meanwhile, Amazon pioneered the digital ebook market with their Kindle and set the bar for competitors like B&N. Even if all book sales tanked, Amazon would have plenty of revenue streaming in from third party sellers and the many, many alternate products they offer at their store. B&N has no such revenue stream plus shrinking profits. This means their cash cycle is inevitably shorter compared to a massive international player like Amazon.

Q2. How does Boeing achieve a cash cycle of negative 100 days ?

Negative Cash Cycles

The lower the cash cycle the better it looks for a company

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