How do the various types of operating and financial leverage impact a company?

Respond to the following questions thoroughly, in 150-300 words for each question.  Use your textbook as your first and major reference.

1. Company’s often encounter stock splits and reverse stock splits. Why do these splits occur? Explain the short-term and long-term effects of split on a company’s financial statements.
2. How do the various types of operating and financial leverage impact a company? Provide examples to support your views. What do you think is the appropriate method for a company to determine the amount of leverage it should possess?
3. Inventory turnover is an important measure of how a firm is managing its current assets, but differs among firms.  For example, the inventory turnover for a grocery store will be much higher than a furniture store.  Why might this be the case?

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