Question 1

Net working capital is a measure of the company's:

Accepted Answer

A) Goodwill 
B) Short-term liabilities 
C) Estimated liquidity 
D) Shareholders' equity 
A) Goodwill 
B) Short-term liabilities 
C) Estimated liquidity 
D) Shareholders' equity

Question 2

Which of the following items should not be included in a listing of current assets?

Accepted Answer

A) Marketable securities 
B) Accounts payable 
C) Accounts receivable 
D) Inventories 
A) Marketable securities 
B) Accounts payable 
C) Accounts receivable 
D) Inventories

Question 3

Depreciation charge is a cash payment.

Accepted Answer

A) True 
 B)False

Question 4

Calculate the cash flow due to production of goods and cash flow from sales if sales were $500, cost of goods sold were $180, accounts receivable increased by $20, and inventory decreased by $18.

Accepted Answer

A)  $480 and -$162 
B)  $550 and -$120 
C)  -$925 and -$480 
D)  -$150 and -$162 
A)  $480 and -$162 
B)  $550 and -$120 
C)  -$925 and -$480 
D)  -$150 and -$162

Question 5

What information is contained in the balance sheet/Income statement, and statement of cash flows?

Accepted Answer

Investors and other stakeholders in the

Question 6

Which of the following changes in working capital will result in an increase in cash flows?

Accepted Answer

A) Increase in accounts payable 
B) Increase in inventories 
C) Increase in accounts receivable 
D) Decrease in other current liabilities 
A) Increase in accounts payable 
B) Increase in inventories 
C) Increase in accounts receivable 
D) Decrease in other current liabilities

Question 7

The difference between gross fixed assets and net fixed assets is accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 8

Compute the total tax liability, the average tax rate, and the marginal tax rate for the following corporation: $1,000,000 in taxable income; 15 percent tax up to $50,000, 25 percent up to $75,000, 34 percent up to $100,000, and 39 percent over $100,000.

Accepted Answer

The answer of Compute the total tax liability, the average...

Question 9

Calculate cash inflow (outflow) from investing activities given the following information: acquisition of business operations $925; disposal of property $605; disposal of intangible asset $175; interest received $80; proceeds of share issue $1,400; repayment of loan $195; dividends paid $200.

Accepted Answer

A) Outflow of $180 
B) Outflow of $65 
C) Inflow of $1,395 
D) Inflow of $220 
A) Outflow of $180 
B) Outflow of $65 
C) Inflow of $1,395 
D) Inflow of $220

Question 10

Determine the net income and also the cash flow from operations for the following firm: $500,000 sales, $10,000 cash dividends, $300,000 cost of goods sold, $20,000 administrative expense, $20,000 depreciation expense, $40,000 interest expense, and a tax rate of 34 percent.

Accepted Answer

@#IMG-DLM& Adding depreciation

Question 11

An increase in depreciation expense will (other things equal):

Accepted Answer

A) Increase net income 
B) Decrease net income 
C) Increase cash flow 
D) Decrease the market value of assets 
A) Increase net income 
B) Decrease net income 
C) Increase cash flow 
D) Decrease the market value of assets

Question 12

Purchases of marketable securities are not considered to be cash used by investments on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following represents a recent trend in financial statements?

Accepted Answer

A) Dividends are appearing on the balance sheet 
B) Income statements no longer record depreciation expense 
C) Statements of cash flow are considered obsolete 
D) Balance sheets record market values rather than historic costs 
A) Dividends are appearing on the balance sheet 
B) Income statements no longer record depreciation expense 
C) Statements of cash flow are considered obsolete 
D) Balance sheets record market values rather than historic costs

Question 14

Which of the following statements about depreciation is correct?

Accepted Answer

A) Depreciation is subtracted from cost of goods sold to calculate net income 
B) When depreciation expense is incurred, cash balances are reduced 
C) Depreciation expense does not affect net income 
D) Depreciation reduces the book value of assets 
A) Depreciation is subtracted from cost of goods sold to calculate net income 
B) When depreciation expense is incurred, cash balances are reduced 
C) Depreciation expense does not affect net income 
D) Depreciation reduces the book value of assets

Question 15

Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense.

Accepted Answer

A) $500,000 
B) $380,000 
C) $0 
D) ($120,000) 
A) $500,000 
B) $380,000 
C) $0 
D) ($120,000)

Question 16

Calculate the cash inflows (outflows) from operating activities if total cash increased by $250,000; cash outflows from Investing activities were $14,000 and cash inflows from financing activities were $190,000

Accepted Answer

A) Inflow of $90,000 
B) Inflow of $81,000 
C) Inflow of $74,000 
D) Inflow of $60,000 
A) Inflow of $90,000 
B) Inflow of $81,000 
C) Inflow of $74,000 
D) Inflow of $60,000

Question 17

Which of the following information is reported on the income statement?

Accepted Answer

A) Accounts Payable 
B) Revenues, Expenses, and Net Income or Net Loss 
C) Current liabilities 
D) Current portion of long-term debt 
A) Accounts Payable 
B) Revenues, Expenses, and Net Income or Net Loss 
C) Current liabilities 
D) Current portion of long-term debt

Question 18

If market values of equity exceed book values of equity, then:

Accepted Answer

A) Equity has been depreciated too rapidly 
B) The firm uses accrual-based accounting 
C) Profit potential is expected to be attractive 
D) The firm is holding too much cash 
A) Equity has been depreciated too rapidly 
B) The firm uses accrual-based accounting 
C) Profit potential is expected to be attractive 
D) The firm is holding too much cash

Question 19

Perhaps the best method for estimating the market value of shareholders' equity is to:

Accepted Answer

A) Read from the firm's balance sheet 
B) Read from the firm's income statement 
C) Multiply number of shares outstanding by the price of each share 
D) Add the retained earnings plus total liabilities 
A) Read from the firm's balance sheet 
B) Read from the firm's income statement 
C) Multiply number of shares outstanding by the price of each share 
D) Add the retained earnings plus total liabilities

Question 20

If depreciation is a method of allocating cost rather than an actual cash flow, discuss how depreciation impacts the income statement and overall cash flows.

Accepted Answer

Depreciation appears on the income state

Exam 3: Accounting and Finance

Net working capital is a measure of the company's:

Which of the following items should not be included in a listing of current assets?

Depreciation charge is a cash payment.

Calculate the cash flow due to production of goods and cash flow from sales if sales were $500, cost of goods sold were $180, accounts receivable increased by $20, and inventory decreased by $18.

What information is contained in the balance sheet/Income statement, and statement of cash flows?

Which of the following changes in working capital will result in an increase in cash flows?

The difference between gross fixed assets and net fixed assets is accumulated depreciation.

Compute the total tax liability, the average tax rate, and the marginal tax rate for the following corporation: $1,000,000 in taxable income; 15 percent tax up to $50,000, 25 percent up to $75,000, 34 percent up to $100,000, and 39 percent over $100,000.

Calculate cash inflow (outflow) from investing activities given the following information: acquisition of business operations $925; disposal of property $605; disposal of intangible asset $175; interest received $80; proceeds of share issue $1,400; repayment of loan $195; dividends paid $200.

Determine the net income and also the cash flow from operations for the following firm: $500,000 sales, $10,000 cash dividends, $300,000 cost of goods sold, $20,000 administrative expense, $20,000 depreciation expense, $40,000 interest expense, and a tax rate of 34 percent.

An increase in depreciation expense will (other things equal):

Purchases of marketable securities are not considered to be cash used by investments on the statement of cash flows.

Which of the following represents a recent trend in financial statements?

Which of the following statements about depreciation is correct?

Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense.

Calculate the cash inflows (outflows) from operating activities if total cash increased by $250,000; cash outflows from Investing activities were $14,000 and cash inflows from financing activities were $190,000

Which of the following information is reported on the income statement?

If market values of equity exceed book values of equity, then:

Perhaps the best method for estimating the market value of shareholders' equity is to:

If depreciation is a method of allocating cost rather than an actual cash flow, discuss how depreciation impacts the income statement and overall cash flows.

Goals and Governance of the Firm

Financial Markets and Institutions

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash-Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

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