Exam 3: Understanding Financial Statements and Cash Flows

It is possible for two companies to have the same financial performance,but their financial statements can be different,depending on how and when the managers choose to report certain transactions.

Which of the following best describes cash flow from financing activities?

The Colorado Jet Boat Company had a cash balance of $3 million at the beginning of 2010.During 2010,Sales were $8 million and expenses were $7 million.Therefore,

Common-sized income statements restate the numbers in the income statement as a percentage of sales to assist in the comparison of a firm's financial performance across time and with competitors.

California Retailing Inc.has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.What is California Retailing's EBIT?

Net working capital is equal to

What are the limitations of financial statements?

Siskiyou,Inc.has total current assets of $1,200,000; total current liabilities of $500,000; long-term assets of $800,000; and long-term debt of $600,000.How much is the firm's total equity?

Finished goods held for sale are inventory,but raw materials to be used in the production process are considered other assets.

Accounting rules specify that assets on the balance sheet must be reported at current market value,because this is the valuation most useful to potential investors.

Inventories are considered fixed assets because inventory levels remain fairly constant throughout the year.

Please refer to Table 3-2 for the following questions. Table 3-2 Enigma has the following financial information: No changes were made in interest payable or taxes payable. -A firm has after-tax cash flow from operations equal to $100,000.Operating working capital increased by $20,000,and the firm purchased $30,000 of fixed assets.The firm's free cash flow was

Cash flows between investors and the firm,what we call financing cash flows,occur in one of four ways EXCEPT:

The increase in owners' equity for a given period is equal to

A firm's income statement reports the results from operating the business for a period of time,while the firm's balance sheet provides a snapshot of the firm's financial position at a specific point in time.

Please refer to Table 3-1 for the following questions. Table 3-1 Jones Company Financial Information -Based on the information in Table 3-1,assuming that no assets were disposed of during 2010,the amount of depreciation expense was

Gross profit is equal to

All of the following are income statement items EXCEPT

Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000.Rogue's net profit margin is equal to