Exam 2: Reviewing Financial Statements

Oakdale Fashions Inc.had $255,000 in 2013 taxable income.If the firm paid $82,100 in taxes,what is the firm's average tax rate?

Mr.Husker's Tuxedos,Corp.began the year 2013 with $205 million in retained earnings.The firm earned net income of $30 million in 2013 and paid $5 million to its preferred stockholders and $12 million to its common stockholders.What is the year-end 2013 balance in retained earnings for Mr.Husker's Tuxedos?

Statement of Retained Earnings Bike and Hike,Inc.started the year with a balance of retained earnings of $100 million and ended the year with retained earnings of $128 million.The company paid dividends of $9 million to the preferred stock holders and $22 million to common stock holders.What was Bike and Hike's net income for the year?

Free Cash Flow The 2013 income statement for Betty's Barstools shows that depreciation expense is $100 million,EBIT is $400 million,and taxes are $120 million.At the end of the year,the balance of gross fixed assets was $510 million.The increase in net operating working capital during the year was $94 million.Betty's free cash flow for the year was $625 million.What was the beginning of year balance for gross fixed assets?

Corporate Taxes Suppose that in addition to the $5.5 million of taxable income from operations,Emily's Flowers,Inc.received $500,000 of interest on state-issued bonds and $300,000 of dividends on common stock it owns in Amy's Iris Bulbs,Inc. Using the tax schedule in Table 2.3 what is Emily's Flowers' income tax liability? What are Emily's Flowers' average and marginal tax rates on total taxable income?

You are evaluating the balance sheet for Goodman's Bees Corporation.From the balance sheet you find the following balances: cash and marketable securities = $200,000,accounts receivable = $1,100,000,inventory = $2,000,000,accrued wages and taxes = $500,000,accounts payable = $600,000,and notes payable = $100,000.Calculate Goodman's Bees' net working capital.

Free Cash Flow The 2013 income statement for John's Gym shows that depreciation expense is $20 million,EBIT is $80 million,and taxes are $24 million.At the end of the year,the balance of gross fixed assets was $102 million.The increase in net operating working capital during the year was $18 million.John's free cash flow for the year was $41 million.What was the beginning of year balance for gross fixed assets?

Which of the following statements is correct?

Statement of Cash Flows Café Creations Inc.has net cash flow from financing activities for the last year of $25 million.The company paid $15 million in dividends last year.During the year,the change in notes payable on the balance sheet was a decrease of $40 million,and change in common and preferred stock was an increase of $50 million.The end of year balance for long-term debt was $40 million.What was their beginning of year balance for long-term debt?

All of the following are cash flows from financing EXCEPT a(n):

A firm had EBIT of $1,000,paid taxes of $225,expensed depreciation at $13,and its gross fixed assets increased by $25.What was the firm's operating cash flow?

Reed's Birdie Shot,Inc.'s 2013 income statement lists the following income and expenses: EBIT = $550,000,interest expense = $43,000,and net income = $300,000.Calculate the 2013 taxes reported on the income statement.

Debt versus Equity Financing You are considering a stock investment in one of two firms (AllDebt,Inc.and AllEquity,Inc.),both of which operate in the same industry and have identical operating income of $3 million.AllDebt,Inc.finances its $6 million in assets with $5 million in debt (on which it pays 5 percent interest annually)and $1 million in equity.AllEquity,Inc.finances its $6 million in assets with no debt and $6 million in equity.Both firms pay a tax rate of 40 percent on their taxable income.What are the asset funders' (the debt holders and stockholders)resulting return on assets for the two firms?

An equity-financed firm will:

Statement of Retained Earnings Use the following information to find dividends paid to common stockholders during 2013.

Corporate Taxes The Ohio Corporation had a 2013 taxable income of $50,000,000 from operations after all operating costs but before (1)interest charges of $500,000, (2)dividends received of $45,000, (3)dividends paid of $10,000,000,and (4)income taxes. Using the tax schedule in Table 2.3,what is Ohio's income tax liability? What are Ohio's average and marginal tax rates on taxable income from operations?

What are the costs and benefits of holding liquid securities on a firm's balance sheet?

Which financial statement reports a firm's assets,liabilities,and equity at a particular point in time?

If a company reports a large amount of net income on its income statement during a year,the firm will have:

Balance Sheet School Books,Inc.has total assets of $18 million of which $6 million are current assets.Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets.School Books' gross plant and equipment has an original cost of $13 million and other long-term assets have a cost value of $2 million.Using this information,what are the balance of inventory and the balance of depreciation on School Books' balance sheet?