Exam 2: Reviewing Financial Statements

Balance Sheet Jack and Jill Corporation's year-end 2013 balance sheet lists current assets of $250,000,fixed assets of $800,000,current liabilities of $195,000,and long-term debt of $300,000.What is Jack and Jill's total stockholders' equity?

Market Value versus Book Value Glo's Glasses balance sheet lists net fixed assets as $20 million.The fixed assets could currently be sold for $25 million.Glo's current balance sheet shows current liabilities of $7 million and net working capital of $3 million.If all the current accounts were liquidated today,the company would receive $9 million cash after paying $7 million in liabilities.What is the book value of Glo's assets today? What is the market value of these assets?

Which of the following is NOT a source of cash?

Statement of Cash Flows In 2013,Upper Crust had cash flows from investing activities of ($250,000)and cash flows from financing activities of ($150,000).The balance in the firm's cash account was $90,000 at the beginning of 2013 and $105,000 at the end of the year.What was Upper Crust's cash flow from operations for 2013?

The CEO of Tom and Sue's wants the company to earn a net income of $3.25 million in 2014.Cost of goods sold is expected to be 60 percent of net sales,depreciation expense is $2.9 million,interest expense is expected to increase to $1.050 million,and the firm's tax rate will be 30 percent.Calculate the net sales needed to produce net income of $3.25 million.

Corporate Taxes Scuba,Inc.is concerned about the taxes paid by the company in 2013.In addition to $5 million of taxable income,the firm received $80,000 of interest on state-issued bonds and $500,000 of dividends on common stock it owns in Boating Adventures,Inc.What are Scuba's tax liability,average tax rate,and marginal tax rate,respectively?

What are free cash flows for a firm? What does it mean when a firm's free cash flow is negative?

Statement of Retained Earnings Night Scapes,Corp.began the year 2013 with $10 million in retained earnings.The firm suffered a net loss of $2 million in 2013 and yet paid $2 million to its preferred stockholders and $1 million to its common stockholders.What is the year-end 2013 balance in retained earnings for Night Scapes?

Lemmon Inc.lists fixed assets of $100 on its balance sheet.The firm's fixed assets have recently been appraised at $140.The firm's balance sheet also lists current assets at $15.Current assets were appraised at $16.50.Current liabilities book and market values stand at $12 and the firm's long-term debt is $40.Calculate the market value of the firm's stockholders' equity.

Income Statement You have been given the following information for Ross's Rocket Corp.: Net sales = $1,000,000; Gross profit = $400,000; Addition to retained earnings = $60,000; Dividends paid to preferred and common stockholders = $90,000; Depreciation expense = $50,000. The firm's tax rate is 40 percent.What are the cost of goods sold and the interest expense for Ross's Rocket Corp.?

On which of the four major financial statements would you find the increase in inventory?

Income Statement You have been given the following information for Nicole's Neckties Corp.: Net sales = $2,500,000; Cost of goods sold = $1,300,000; Addition to retained earnings = $30,000; Dividends paid to preferred and common stockholders = $300,000; Interest expense = $50,000. The firm's tax rate is 40 percent.What is the depreciation expense for Nicole's Neckties Corp.?

Free Cash Flow The 2013 income statement for Paige's Purses shows that depreciation expense is $10 million,EBIT is $25 million,EBT is $15 million,and the tax rate is 30 percent.At the beginning of the year,the balance of gross fixed assets was $80 million and net operating working capital was $30 million.At the end of the year gross fixed assets was $100 million.Paige's free cash flow for the year was $20 million.What is their end of year balance for net operating working capital?

Corporate Taxes Eccentricity,Inc.had $300,000 in 2013 taxable income.Using the tax schedule from Table 2-3,what are the company's 2013 income taxes,average tax rate,and marginal tax rate,respectively?

Free Cash Flow Catering Corp.reported free cash flows for 2013 of $8 million and investment in operating capital of $2 million.Catering listed $1 million in depreciation expense and $2 million in taxes on its 2008 income statement.What was Catering's 2013 EBIT?

Ed's Tobacco Shop has total assets of $100 million.Fifty percent of these assets are financed with debt of which $37 million is current liabilities.The firm has no preferred stock but the balance in common stock and paid-in surplus is $32 million.Using this information what is the balance for long-term debt and retained earnings on Ed's Tobacco Shop's balance sheet?

Tater and Pepper Corp.reported free cash flows for 2013 of $20 million and investment in operating capital of $15 million.Tater and Pepper listed $8 million in depreciation expense and $12 million in taxes on its 2010 income statement.Calculate Tater and Pepper's 2013 EBIT.

In 2014,Usher Sports Shop had cash flows from investing activities of ($2,150,000)and cash flows from financing activities of ($3,219,000).The balance in the firm's cash account was $980,000 at the beginning of 2014 and $1,025,000 at the end of the year.Calculate Usher Sports Shop's cash flow from operations for 2014.

Deferred taxes occur when a company postpones taxes on profits pertaining to:

Free cash flow is defined as: