Question 1

What is the amount of net new borrowing for 2011?

Accepted Answer

A)  -$225 
B)  -$25 
C)  $0 
D)  $25 
E)  $225 
A)  -$225 
B)  -$25 
C)  $0 
D)  $25 
E)  $225

Question 2

The cash flow to creditors includes the cash:

Accepted Answer

A)  received by the firm when payments are paid to suppliers. 
B)  outflow of the firm when new debt is acquired. 
C)  outflow when interest is paid on outstanding debt. 
D)  inflow when accounts payable decreases. 
E)  received when long-term debt is paid off. 
A)  received by the firm when payments are paid to suppliers. 
B)  outflow of the firm when new debt is acquired. 
C)  outflow when interest is paid on outstanding debt. 
D)  inflow when accounts payable decreases. 
E)  received when long-term debt is paid off.

Question 3

Your firm has net income of $198 on total sales of $1,200. Costs are $715 and depreciation is $145. The tax rate is 34%. The firm does not have interest expenses. What is the operating cash flow?

Accepted Answer

A)  $93 
B)  $241 
C)  $340 
D)  $383 
E)  $485 
A)  $93 
B)  $241 
C)  $340 
D)  $383 
E)  $485

Question 4

Why is cash flow management important?

Accepted Answer

Cash flow management is important becaus

Question 5

Total assets are $1000,fixed assets are $700,long-term debt is $250,and short-term debt is $300. What is the amount of net working capital?

Accepted Answer

A)  $0 
B)  $50 
C)  $300 
D)  $650 
E)  $700 
A)  $0 
B)  $50 
C)  $300 
D)  $650 
E)  $700

Question 6

Depreciation:

Accepted Answer

A)  is a noncash expense that is recorded on the income statement. 
B)  increases the net fixed assets as shown on the balance sheet. 
C)  reduces both the net fixed assets and the costs of a firm. 
D)  is a non-cash expense which increases the net operating income. 
E)  decreases net fixed assets, net income, and operating cash flows. 
A)  is a noncash expense that is recorded on the income statement. 
B)  increases the net fixed assets as shown on the balance sheet. 
C)  reduces both the net fixed assets and the costs of a firm. 
D)  is a non-cash expense which increases the net operating income. 
E)  decreases net fixed assets, net income, and operating cash flows.

Question 7

Which of the following are all components of the statement of cash flows?

Accepted Answer

A)  Cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities 
B)  Cash flow from operating activities, cash flow from investing activities, and cash flow from divesting activities 
C)  Cash flow from internal activities, cash flow from external activities, and cash flow from financing activities 
D)  Cash flow from brokering activities, cash flow from profitable activities, and cash flow from non-profitable activities 
E)  None of these. 
A)  Cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities 
B)  Cash flow from operating activities, cash flow from investing activities, and cash flow from divesting activities 
C)  Cash flow from internal activities, cash flow from external activities, and cash flow from financing activities 
D)  Cash flow from brokering activities, cash flow from profitable activities, and cash flow from non-profitable activities 
E)  None of these.

Question 8

What is the operating cash flow for 2011?

Accepted Answer

A)  $143 
B)  $297 
C)  $325 
D)  $353 
E)  $367 
A)  $143 
B)  $297 
C)  $325 
D)  $353 
E)  $367

Question 9

The cash flow of the firm must be equal to:

Accepted Answer

A)  cash flow to stockholders minus cash flow to debtholders. 
B)  cash flow to debtholders minus cash flow to stockholders. 
C)  cash flow to governments plus cash flow to stockholders. 
D)  cash flow to stockholders plus cash flow to debtholders. 
E)  None of these. 
A)  cash flow to stockholders minus cash flow to debtholders. 
B)  cash flow to debtholders minus cash flow to stockholders. 
C)  cash flow to governments plus cash flow to stockholders. 
D)  cash flow to stockholders plus cash flow to debtholders. 
E)  None of these.

Question 10

When you are making a financial decision,the most relevant tax rate is the __________ rate.

Accepted Answer

A)  average 
B)  fixed 
C)  marginal 
D)  total 
E)  variable 
A)  average 
B)  fixed 
C)  marginal 
D)  total 
E)  variable

Question 11

What are the sales for 2011?

Accepted Answer

A)  $4,225 
B)  $4,385 
C)  $4,600 
D)  $4,815 
E)  $5,000 
A)  $4,225 
B)  $4,385 
C)  $4,600 
D)  $4,815 
E)  $5,000

Question 12

Sometimes when businesses are critically delinquent on their tax liabilities,the tax authority comes in and literally seizes the business by chasing all of the employees out of the building and changing the locks. What does this tell you about the importance of taxes relative to our discussion of cash flow?
 Why might a business owner want to avoid such an occurrence?

Accepted Answer

Taxes must be paid in cash,and in this c

Question 13

The long-term debts of a firm are liabilities:

Accepted Answer

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

Question 14

_____ is calculated by adding back noncash expenses to net income and adjusting for changes in current assets and liabilities.

Accepted Answer

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

Exam 2: Financial Statements and Cash Flow

What is the amount of net new borrowing for 2011?

The cash flow to creditors includes the cash:

Your firm has net income of $198 on total sales of $1,200. Costs are $715 and depreciation is $145. The tax rate is 34%. The firm does not have interest expenses. What is the operating cash flow?

Why is cash flow management important?

Total assets are $1000,fixed assets are $700,long-term debt is $250,and short-term debt is $300. What is the amount of net working capital?

Depreciation:

Which of the following are all components of the statement of cash flows?

What is the operating cash flow for 2011?

The cash flow of the firm must be equal to:

When you are making a financial decision,the most relevant tax rate is the __________ rate.

What are the sales for 2011?

The long-term debts of a firm are liabilities:

_____ is calculated by adding back noncash expenses to net income and adjusting for changes in current assets and liabilities.

Introduction to Corporate Finance

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model Capm

An Alternative View of Risk and Return: The Arbitrage Pricing Theory

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Raising Capital

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

Short-Term Finance and Planning

Cash Management

Credit and Inventory Management

Mergers, Acquisitions, and Divestitures

Financial Distress

International Corporate Finance

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