1. Joe (an average investor) wants to make an investment. What, in terms of operating and/or financial leverage, might he want to consider in making his choice?
2. You're on the loan committee of a financial services firm, reviewing a request for a sizable loan. The requesting firm appears to have a fairly low ratio of expense to sales. As you examine the financial statements, what might give rise to concern over issuing this loan?
3. Why might a securities analyst for a brokerage firm (pondering whether to buy a specific stock) have a different view on liquidity than an auditor for a governmental regulatory agency (FDIC, for example)?
4.
What on a bank's balance sheet, in terms of liquidity, might concern an auditor for a regulatory agency?
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