Question 1

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. A

Question 2

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. D

Question 3

Martha's Enterprises spent $3,300 to purchase equipment 2 years ago.This equipment is currently valued at $2,357 on today's balance sheet but could actually be sold for $2,750.Net working capital is $860 and long-term debt is $1,650.Assuming this equipment is the firm's only fixed asset,what is the book value of shareholders' equity?

Accepted Answer

A) $1,960 
B) $1,800 
C) $1,567 
D) $2,510 
E) $1,633 
A) $1,960 
B) $1,800 
C) $1,567 
D) $2,510 
E) $1,633 C

Question 4

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 5

Book value is

Accepted Answer

A) based on historical cost. 
B) equivalent to market value for firms with fixed assets. 
C) more of a financial than an accounting valuation. 
D) the amount a willing buyer will pay for an asset. 
E) adjusted to market value whenever the market value exceeds the stated book value. 
A) based on historical cost. 
B) equivalent to market value for firms with fixed assets. 
C) more of a financial than an accounting valuation. 
D) the amount a willing buyer will pay for an asset. 
E) adjusted to market value whenever the market value exceeds the stated book value.

Question 6

A firm has $480 in inventory,$1,860 in fixed assets,$520 in accounts receivables,$190 in net working capital,and $120 in cash.What is the amount of the current liabilities?

Accepted Answer

A) $550 
B) $770 
C) $820 
D) $760 
E) $930 
A) $550 
B) $770 
C) $820 
D) $760 
E) $930

Question 7

Your ________ tax rate measures the total taxes you pay divided by your total taxable income.

Accepted Answer

A) average 
B) marginal 
C) total 
D) deductible 
E) residual 
A) average 
B) marginal 
C) total 
D) deductible 
E) residual

Question 8

The financial information on Lazy Day,Inc.is as follows:
 
What is net capital spending for 2017?

Accepted Answer

A) $1,115 
B) $1,028 
C) $80 
D) $210 
E) $946 
A) $1,115 
B) $1,028 
C) $80 
D) $210 
E) $946

Question 9

You have compiled the following information on Winslow,Inc.:
 
What is the amount of net new borrowing for 2017?

Accepted Answer

A) $3,750 
B) $3,250 
C) $3,360 
D) $4,040 
E) $3,480 
A) $3,750 
B) $3,250 
C) $3,360 
D) $4,040 
E) $3,480

Question 10

Pineapple Express has selling and administrative expenses of $2,618,costs of goods sold of $24,318,depreciation of $915,and an interest expense of $520.The firm paid $150 in dividends and added $384 to retained earnings for the year.What is the firm's operating cash flow if the tax rate is 35 percent?
What is the operating cash flow?

Accepted Answer

A) $1,823.14 
B) $2,072.12 
C) $1,969.00 
D) $2,516.48 
E) $2,208.15 
A) $1,823.14 
B) $2,072.12 
C) $1,969.00 
D) $2,516.48 
E) $2,208.15

Question 11

You are given the following balance sheets.
 
What is the change in the net working capital from 2016 to 2017?

Accepted Answer

A) $45 
B) -$35 
C) $50 
D) -$50 
E) $35 
A) $45 
B) -$35 
C) $50 
D) -$50 
E) $35

Question 12

Charter Tours has the following balance sheets:
 
What is the amount of net working capital for 2017?

Accepted Answer

A) $751 
B) $1,057 
C) $1,128 
D) $1,734 
E) $826 
A) $751 
B) $1,057 
C) $1,128 
D) $1,734 
E) $826

Question 13

________ refers to a firm's interest payments minus any net new borrowing.

Accepted Answer

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

Question 14

As seen on an income statement,

Accepted Answer

A) interest is deducted from income and increases the total taxes incurred. 
B) depreciation reduces both the pretax income and the net income. 
C) depreciation is shown as an expense but does not affect the taxes payable. 
D) the tax rate is applied to the earnings before interest and taxes when the firm has both depreciation and interest expenses. 
E) both dividends and interest expense reduce corporate income taxes. 
A) interest is deducted from income and increases the total taxes incurred. 
B) depreciation reduces both the pretax income and the net income. 
C) depreciation is shown as an expense but does not affect the taxes payable. 
D) the tax rate is applied to the earnings before interest and taxes when the firm has both depreciation and interest expenses. 
E) both dividends and interest expense reduce corporate income taxes.

Question 15

The cash flow of a firm,also referred to as cash flow from assets,must be equal to the cash flow to

Accepted Answer

A) debt holders minus the cash flow to equity holders. 
B) equity holders plus the cash flow to debt holders. 
C) the government plus the cash flow to equity holders. 
D) equity holders minus the cash flow to debt holders. 
E) the government,the debt holders,and the equity holders. 
A) debt holders minus the cash flow to equity holders. 
B) equity holders plus the cash flow to debt holders. 
C) the government plus the cash flow to equity holders. 
D) equity holders minus the cash flow to debt holders. 
E) the government,the debt holders,and the equity holders.

Question 16

Total assets are $2,630,fixed assets are $1,825,long-term debt is $1,015,and short-term debt is $530.What is the amount of net working capital?

Accepted Answer

A) $1,295 
B) $275 
C) $1,085 
D) $350 
E) $400 
A) $1,295 
B) $275 
C) $1,085 
D) $350 
E) $400

Question 17

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 18

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 19

A firm has beginning retained earnings of $4,200 and ending retained earnings of $4,150.What is the amount of dividends paid if the firm earned a net income of $1,950?

Accepted Answer

A) $1,500 
B) $1,950 
C) $1,900 
D) $2,000 
E) $2,100 
A) $1,500 
B) $1,950 
C) $1,900 
D) $2,000 
E) $2,100

Question 20

Revenue is recorded on an income statement when

Accepted Answer

A) payment for a sale has been received in full. 
B) an order for goods is placed. 
C) an exchange of goods or services has occurred and the earnings process is completed. 
D) an order for goods or services is placed and an initial payment is received. 
E) goods are placed in inventory and ready for future delivery. 
A) payment for a sale has been received in full. 
B) an order for goods is placed. 
C) an exchange of goods or services has occurred and the earnings process is completed. 
D) an order for goods or services is placed and an initial payment is received. 
E) goods are placed in inventory and ready for future delivery.

Capital spending is equal to

The carrying value or book value of assets

Depreciation

Book value is

A firm has $480 in inventory,$1,860 in fixed assets,$520 in accounts receivables,$190 in net working capital,and $120 in cash.What is the amount of the current liabilities?

Your ________ tax rate measures the total taxes you pay divided by your total taxable income.

The financial information on Lazy Day,Inc.is as follows: What is net capital spending for 2017?

You have compiled the following information on Winslow,Inc.: What is the amount of net new borrowing for 2017?

You are given the following balance sheets. What is the change in the net working capital from 2016 to 2017?

Charter Tours has the following balance sheets: What is the amount of net working capital for 2017?

________ refers to a firm's interest payments minus any net new borrowing.

As seen on an income statement,

The cash flow of a firm,also referred to as cash flow from assets,must be equal to the cash flow to

Total assets are $2,630,fixed assets are $1,825,long-term debt is $1,015,and short-term debt is $530.What is the amount of net working capital?

Earnings per share is computed as

Cash flow to stockholders is best defined as

A firm has beginning retained earnings of $4,200 and ending retained earnings of $4,150.What is the amount of dividends paid if the firm earned a net income of $1,950?

Revenue is recorded on an income statement when

Introduction to Corporate Finance

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividends and Other Payouts

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

Filters

Exam 2: Financial Statements and Cash Flow

Capital spending is equal to

The carrying value or book value of assets

Depreciation

Book value is

A firm has $480 in inventory,$1,860 in fixed assets,$520 in accounts receivables,$190 in net working capital,and $120 in cash.What is the amount of the current liabilities?

Your ________ tax rate measures the total taxes you pay divided by your total taxable income.

The financial information on Lazy Day,Inc.is as follows: What is net capital spending for 2017?

You have compiled the following information on Winslow,Inc.: What is the amount of net new borrowing for 2017?

You are given the following balance sheets. What is the change in the net working capital from 2016 to 2017?

Charter Tours has the following balance sheets: What is the amount of net working capital for 2017?

________ refers to a firm's interest payments minus any net new borrowing.

As seen on an income statement,

The cash flow of a firm,also referred to as cash flow from assets,must be equal to the cash flow to

Total assets are $2,630,fixed assets are $1,825,long-term debt is $1,015,and short-term debt is $530.What is the amount of net working capital?

Earnings per share is computed as

Cash flow to stockholders is best defined as

A firm has beginning retained earnings of $4,200 and ending retained earnings of $4,150.What is the amount of dividends paid if the firm earned a net income of $1,950?

Revenue is recorded on an income statement when

Introduction to Corporate Finance

Financial Statements Analysis and Financial Models

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividends and Other Payouts

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

Filters