Section FIN220 Assignment 2 Part 1: Critical Thinking Questions 1) What is net working capital? Why might a low value for this number be considered undesirable? 2) What is the difference between book value and market value? 3) Compare and contrast depreciation expense and amortization expense. 4) Why are retained earnings not considered an asset of the firm? 5) What does it mean when a company's Return on Assets is equal to its Return on Equity? 6) Why is too much liquidity not a good thing? 7) Inventory is excluded when the quick ratio or acid-test ratio is calculated because inventory is the most difficult current asset to convert to cash without loss of value. What types of inventory are likely to be most easily converted to cash without loss of value? 8)What does a very high inventory turnover ratio signify? 9) How would one explain a low receivables turnover ratio? 10) Why is it not enough for an analyst to look at just the short-term and long-term debt on a firm's balance sheet