Question 1

The long-term debts of a firm are liabilities

Accepted Answer

A) owed to the firm's stockholders. 
B) that do not come due for at least 12 months. 
C) owed to the firm's suppliers. 
D) that come due within the next 12 months. 
E) the firm expects to incur within the next 12 months. 
A) owed to the firm's stockholders. 
B) that do not come due for at least 12 months. 
C) owed to the firm's suppliers. 
D) that come due within the next 12 months. 
E) the firm expects to incur within the next 12 months.

Question 2

Earnings per share is computed as

Accepted Answer

A) net income divided by total stockholders' equity. 
B) EBIT divided by total stockholders' equity. 
C) pretax income minus current taxes divided by total shares outstanding. 
D) the addition to retained earnings divided by total shares outstanding. 
E) net income divided by total shares outstanding. 
A) net income divided by total stockholders' equity. 
B) EBIT divided by total stockholders' equity. 
C) pretax income minus current taxes divided by total shares outstanding. 
D) the addition to retained earnings divided by total shares outstanding. 
E) net income divided by total shares outstanding.

Question 3

Art's Boutique has sales of $610,000 and costs of $480,000.Interest expense is $40,000,dividends paid is $37,000,and depreciation is $60,000.The tax rate is 34 percent and there are 8,500 shares of stock outstanding.What is the earnings per share?

Accepted Answer

A) $1.99 
B) $2.33 
C) $3.53 
D) $4.28 
E) $2.67 
A) $1.99 
B) $2.33 
C) $3.53 
D) $4.28 
E) $2.67

Question 4

The cash flow to creditors increases when

Accepted Answer

A) cash is used to reduce accounts payable. 
B) new shares of stock are sold for cash. 
C) interest is paid on outstanding debt. 
D) an asset is sold for cash. 
E) a long-term debt is incurred. 
A) cash is used to reduce accounts payable. 
B) new shares of stock are sold for cash. 
C) interest is paid on outstanding debt. 
D) an asset is sold for cash. 
E) a long-term debt is incurred.

Question 5

Teddy's Pillows had beginning net fixed assets of $648 and ending net fixed assets of $621.Assets valued at $285 were sold during the year.Depreciation was $76.What is the amount of net capital spending?

Accepted Answer

A) $334 
B) $236 
C) $115 
D) $49 
E) $66 
A) $334 
B) $236 
C) $115 
D) $49 
E) $66

Question 6

Depreciation

Accepted Answer

A) reduces both the net fixed assets and the costs of a firm. 
B) decreases net fixed assets,net income,and operating cash flows. 
C) is a noncash expense that decreases the selling,general,and administrative expenses. 
D) is a noncash expense that reduces the pretax income. 
E) increases the net fixed assets as shown on the balance sheet. 
A) reduces both the net fixed assets and the costs of a firm. 
B) decreases net fixed assets,net income,and operating cash flows. 
C) is a noncash expense that decreases the selling,general,and administrative expenses. 
D) is a noncash expense that reduces the pretax income. 
E) increases the net fixed assets as shown on the balance sheet.

Question 7

You have compiled the following information on the Shoe Store:   What is the amount of the net capital spending for 2017?

Accepted Answer

A) $224 
B) $639 
C) -$224 
D) $362 
E) $191 
A) $224 
B) $639 
C) -$224 
D) $362 
E) $191

Question 8

Cash flow to stockholders is best defined as

Accepted Answer

A) the total dividends paid. 
B) the cash flow from assets plus the cash flow to creditors. 
C) cash dividends plus repurchases of equity minus new equity financing. 
D) repurchases of equity less cash dividends paid plus new equity sold. 
E) the net change in common stock and capital surplus. 
A) the total dividends paid. 
B) the cash flow from assets plus the cash flow to creditors. 
C) cash dividends plus repurchases of equity minus new equity financing. 
D) repurchases of equity less cash dividends paid plus new equity sold. 
E) the net change in common stock and capital surplus.

Question 9

An example of a current liability is

Accepted Answer

A) a loan secured by a mortgage and payable in 8 months. 
B) any loan payable to a bank. 
C) all accounts due from customers within the next year. 
D) a note payable in full in 18 months. 
E) an account due from a customer that is past due. 
A) a loan secured by a mortgage and payable in 8 months. 
B) any loan payable to a bank. 
C) all accounts due from customers within the next year. 
D) a note payable in full in 18 months. 
E) an account due from a customer that is past due.

Question 10

Current assets include

Accepted Answer

A) inventory and accounts receivable. 
B) accounts payable and cash. 
C) cash and intangible assets. 
D) inventory and accounts payable. 
E) buildings and equipment. 
A) inventory and accounts receivable. 
B) accounts payable and cash. 
C) cash and intangible assets. 
D) inventory and accounts payable. 
E) buildings and equipment.

Question 11

________ refers to a firm's dividend payments minus any net new equity raised.

Accepted Answer

A) Operating cash flow 
B) Capital spending 
C) Net working capital 
D) Cash flow to stockholders 
E) Cash flow from creditors 
A) Operating cash flow 
B) Capital spending 
C) Net working capital 
D) Cash flow to stockholders 
E) Cash flow from creditors

Question 12

Which one of the following statements concerning liquidity is correct?

Accepted Answer

A) Fixed assets are more liquid than current assets. 
B) Balance sheet accounts are listed in order of decreasing liquidity. 
C) Liquid assets tend to be highly profitable. 
D) The less liquidity a firm has,the lower the probability the firm will encounter financial difficulties. 
E) Trademarks and patents are highly liquid. 
A) Fixed assets are more liquid than current assets. 
B) Balance sheet accounts are listed in order of decreasing liquidity. 
C) Liquid assets tend to be highly profitable. 
D) The less liquidity a firm has,the lower the probability the firm will encounter financial difficulties. 
E) Trademarks and patents are highly liquid.

Question 13

A firm starts its year with positive net working capital.During the year,the firm acquires more short-term debt than it does short-term assets.This means that

Accepted Answer

A) the ending net working capital might be positive,negative,or equal to zero. 
B) both accounts receivable and inventory decreased during the year. 
C) the beginning current assets were less than the beginning current liabilities. 
D) accounts payable increased and inventory decreased during the year. 
E) the ending net working capital will be negative. 
A) the ending net working capital might be positive,negative,or equal to zero. 
B) both accounts receivable and inventory decreased during the year. 
C) the beginning current assets were less than the beginning current liabilities. 
D) accounts payable increased and inventory decreased during the year. 
E) the ending net working capital will be negative.

Question 14

Lester's has $33,600 in sales,$17,200 in cost of goods sold,$2,300 in depreciation,$980 in interest expense,and $5,800 in selling,general,and administrative expenses.The firm owes no taxes for this year.What is the amount of the period costs that are included in the operating cash flow?

Accepted Answer

A) $25,300 
B) $3,280 
C) $23,980 
D) $23,000 
E) $5,800 
A) $25,300 
B) $3,280 
C) $23,980 
D) $23,000 
E) $5,800

Question 15

Brad's Company has equipment with a book value of $1,380 that could be sold today at a 20 percent discount.Its inventory is valued at $360 and could be sold to a competitor for 90 percent of that value.The firm has $45 in cash and customers owe them $240,of which 97 percent is collectible.What is the accounting value of its liquid assets?

Accepted Answer

A) $601.80 
B) $350.00 
C) $2,025.00 
D) $645.00 
E) $1,705.80 
A) $601.80 
B) $350.00 
C) $2,025.00 
D) $645.00 
E) $1,705.80

Question 16

The tax rates are as shown.Your firm currently has taxable income of $73,900.How much additional tax will the firm owe if it increases its taxable income by $10,000?

Accepted Answer

A) $3,400 
B) $3,500 
C) $2,500 
D) $2,950 
E) $3,301 
A) $3,400 
B) $3,500 
C) $2,500 
D) $2,950 
E) $3,301

Question 17

________ is calculated by adding back noncash expenses to earnings before interest and taxes,subtracting taxes,and adjusting for any changes in total assets or current liabilities that affect cash flows.

Accepted Answer

A) Distributable cash flow 
B) Capital spending 
C) Cash flow from assets 
D) Cash flow from investing activities 
E) Cash flow to creditors 
A) Distributable cash flow 
B) Capital spending 
C) Cash flow from assets 
D) Cash flow from investing activities 
E) Cash flow to creditors

Question 18

The carrying value or book value of assets

Accepted Answer

A) is always the best measure of a company's value to an investor. 
B) represents an average market value over time. 
C) is always higher than the replacement cost of the assets. 
D) is determined under GAAP and is based on the cost of the assets. 
E) is determined under GAAP and is based on the current market value of the assets. 
A) is always the best measure of a company's value to an investor. 
B) represents an average market value over time. 
C) is always higher than the replacement cost of the assets. 
D) is determined under GAAP and is based on the cost of the assets. 
E) is determined under GAAP and is based on the current market value of the assets.

Question 19

What is the formula for computing operating cash flow?

Accepted Answer

A) EBIT + Depreciation − Current taxes 
B) EBIT + Depreciation − Interest expense − Current taxes 
C) EBIT + NWC − Depreciation 
D) EBIT − Depreciation + Current taxes 
E) EBIT − Change in NWC + Depreciation − Current taxes 
A) EBIT + Depreciation − Current taxes 
B) EBIT + Depreciation − Interest expense − Current taxes 
C) EBIT + NWC − Depreciation 
D) EBIT − Depreciation + Current taxes 
E) EBIT − Change in NWC + Depreciation − Current taxes

Question 20

Capital spending is equal to

Accepted Answer

A) the net purchases and sales of fixed assets. 
B) total cash flow to stockholders less interest and dividends paid. 
C) net income plus depreciation. 
D) the net change in total assets. 
E) the change in current assets minus the change in current liabilities. 
A) the net purchases and sales of fixed assets. 
B) total cash flow to stockholders less interest and dividends paid. 
C) net income plus depreciation. 
D) the net change in total assets. 
E) the change in current assets minus the change in current liabilities.

The long-term debts of a firm are liabilities

Earnings per share is computed as

Art's Boutique has sales of $610,000 and costs of $480,000.Interest expense is $40,000,dividends paid is $37,000,and depreciation is $60,000.The tax rate is 34 percent and there are 8,500 shares of stock outstanding.What is the earnings per share?

The cash flow to creditors increases when

Teddy's Pillows had beginning net fixed assets of $648 and ending net fixed assets of $621.Assets valued at $285 were sold during the year.Depreciation was $76.What is the amount of net capital spending?

Depreciation

You have compiled the following information on the Shoe Store: What is the amount of the net capital spending for 2017?

Cash flow to stockholders is best defined as

An example of a current liability is

Current assets include

________ refers to a firm's dividend payments minus any net new equity raised.

Which one of the following statements concerning liquidity is correct?

A firm starts its year with positive net working capital.During the year,the firm acquires more short-term debt than it does short-term assets.This means that

Lester's has $33,600 in sales,$17,200 in cost of goods sold,$2,300 in depreciation,$980 in interest expense,and $5,800 in selling,general,and administrative expenses.The firm owes no taxes for this year.What is the amount of the period costs that are included in the operating cash flow?

The tax rates are as shown.Your firm currently has taxable income of $73,900.How much additional tax will the firm owe if it increases its taxable income by $10,000?

________ is calculated by adding back noncash expenses to earnings before interest and taxes,subtracting taxes,and adjusting for any changes in total assets or current liabilities that affect cash flows.

The carrying value or book value of assets

What is the formula for computing operating cash flow?

Capital spending is equal to

Introduction to Corporate Finance

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Risk Amcq Return: Lessons From Market History

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

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Exam 2: Financial Statements AMCQ Cash Flow

The long-term debts of a firm are liabilities

Earnings per share is computed as

Art's Boutique has sales of $610,000 and costs of $480,000.Interest expense is $40,000,dividends paid is $37,000,and depreciation is $60,000.The tax rate is 34 percent and there are 8,500 shares of stock outstanding.What is the earnings per share?

The cash flow to creditors increases when

Teddy's Pillows had beginning net fixed assets of $648 and ending net fixed assets of $621.Assets valued at $285 were sold during the year.Depreciation was $76.What is the amount of net capital spending?

Depreciation

You have compiled the following information on the Shoe Store: What is the amount of the net capital spending for 2017?

Cash flow to stockholders is best defined as

An example of a current liability is

Current assets include

________ refers to a firm's dividend payments minus any net new equity raised.

Which one of the following statements concerning liquidity is correct?

A firm starts its year with positive net working capital.During the year,the firm acquires more short-term debt than it does short-term assets.This means that

Lester's has $33,600 in sales,$17,200 in cost of goods sold,$2,300 in depreciation,$980 in interest expense,and $5,800 in selling,general,and administrative expenses.The firm owes no taxes for this year.What is the amount of the period costs that are included in the operating cash flow?

The tax rates are as shown.Your firm currently has taxable income of $73,900.How much additional tax will the firm owe if it increases its taxable income by $10,000?

________ is calculated by adding back noncash expenses to earnings before interest and taxes,subtracting taxes,and adjusting for any changes in total assets or current liabilities that affect cash flows.

The carrying value or book value of assets

What is the formula for computing operating cash flow?

Capital spending is equal to

Introduction to Corporate Finance

Financial Statements Analysis Amcq Financial Models

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Risk Amcq Return: Lessons From Market History

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

Filters