1. a. What is the difference between MVA and EVA?
b. Are both measures applicable to not-for-profit businesses? Explain your answer.
2. a. Modern Medical Devices has a current ratio of 0.5. Which of the following actions would improve (i.e., increase) this ratio?
• Use cash to pay off current liabilities.
• Collect some of the current accounts receivable.
• Use cash to pay off some long-term debt.
• Purchase additional inventory on credit (i.e., accounts payable).
• Sell some of the existing inventory at cost.
b. Assume that the company has a current ratio of 1.2. Now, which of the above actions would improve this ratio?
