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Canadian savings bonds, perferred vs common stock, and the causes of poor inventory turnover

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1. List at least three basic characteristics of preferred shares that differentiate them from common shares.

Preferred stock carries no voting rights, but takes precedence over other shares in the liquidation of assets or dividend payments. It provides the owner with a fixed return, but does not increase in value as would common stock.

2. What might a poor inventory turnover ratio signify (other than it is not generally desirable)? Hint: think about the components of this ratio and some of the problems you might see in the values reported in the financial statements.

The inventory turnover ratio is calculated by dividing the cost of goods sold by average inventory (beginning inventory + ending inventory)/2. A lower ratio results when inventory ...

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