Exam 2: Reviewing Financial Statements

Which financial statement shows the total revenues that a firm earns and the total expenses the firm incurs to generate those revenues over a specific period of time-generally one year?

You are considering an investment in Cruise,Inc.and want to evaluate the firm's free cash flow.From the income statement,you see that Cruise earned an EBIT of $202 million,paid taxes of $51 million,and its depreciation expense was $75 million.Cruise's gross fixed assets increased by $70 million from 2017 to 2018.The firm's current assets decreased by $10 million and spontaneous current liabilities increased by $6 million.What is Cruise's operating cash flow,investment in operating capital,and free cash flow for 2018,respectively,in millions?

On which of the four major financial statements would you find net plant and equipment?

All of the following are reasons that one should be cautious in interpreting financial statements EXCEPT

Downtown Development,Inc.'s 2018 income statement lists the following income and expenses: EBIT = $700,000,interest expense = $100,000,and taxes = $168,000.Downtown has no preferred stock outstanding and 50,000 shares of common stock outstanding.What are its 2018 earnings per share?

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.

These are cash inflows and outflows associated with buying and selling of fixed or other long-term assets.

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

You have been given the following information for Fina's Furniture Corp.: Net sales = $25,500,000; Cost of goods sold = $10,250,000; Addition to retained earnings = $305,000; Dividends paid to preferred and common stockholders = $500,000; Interest expense = $2,000,000.The firm's tax rate is 30 percent.What is the depreciation expense for Fina's Furniture Corp.?

Ramakrishnan Inc.reported 2018 net income of $20 million and depreciation of $1,500,000.The top part of Ramakrishnan,Inc.'s 2017 and 2018 balance sheets is listed as follows (in millions of dollars). Calculate the 2018 net cash flow from operating activities for Ramakrishnan,Inc.

The Sasnak Corporation had a 2018 taxable income of $4,450,000 from operations after all operating costs but before (1)interest charges of $750,000, (2)dividends received of $900,000, (3)dividends paid of $500,000,and (4)income taxes. Using the tax schedule in Table 2.3,what is Sasnak's income tax liability? What are Sasnak's average and marginal tax rates on taxable income from operations?

All of the following are cash flows from operations EXCEPT

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?

Night Scapes,Corp.began the year 2018 with $10 million in retained earnings.The firm suffered a net loss of $2 million in 2018 and yet paid $2 million to its preferred stockholders and $1 million to its common stockholders.What is the year-end 2018 balance in retained earnings for Night Scapes?

Which of the following is an example of a capital structure?

Scuba,Inc.is concerned about the taxes paid by the company in 2018.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?

Is it possible for a firm to have positive net income and yet to have cash flow problems?

TriCycle,Corp.began the year 2018 with $25 million in retained earnings.The firm earned net income of $7 million in 2018 and paid $1 million to its preferred stockholders and $3 million to its common stockholders.What is the year-end 2018 balance in retained earnings for TriCycle?

When a firm alters its capital structure to include more or less debt (and,in turn,less or more equity),it impacts which of the following?

On which of the four major financial statements would you find the common stock and paid-in surplus?