Question 1

Which one of the following will increase the cash flow from assets, all else equal?

Accepted Answer

A)  decrease in cash flow to stockholders
B)  decrease in operating cash flow
C)  increase in the change in net working capital
D)  decrease in cash flow to creditors
E)  decrease in net capital spendingF) A) and D)
G) C) and D)

Question 2

The cash flow related to interest payments less any net new borrowing is called the:

Accepted Answer

A)  operating cash flow.
B)  capital spending cash flow.
C)  net working capital.
D)  cash flow from assets.
E)  cash flow to creditors.F) A) and E)
G) C) and D)

Question 3

The 2011 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940. The 2012 balance sheet showed current assets of $1,640 and current liabilities of $1,140. What was the change in net working capital for 2012?

Accepted Answer

A)  $80
B)  $170
C)  $190
D)  $880
E)  $920F) A) and E)
G) B) and D)

Question 4

What is the taxable income for 2012?

Accepted Answer

A)  $1,051.00
B)  $1,367.78
C)  $1,592.42
D)  $2,776.41
E)  $3,091.18F) A) and E)
G) A) and D)

Question 5

What is the change in net working capital from 2011 to 2012?

Accepted Answer

A)  -$175
B)  -$70
C)  $125
D)  $240
E)  $315F) B) and E)
G) None of the above

Question 6

What is the amount of dividends paid in 2012?

Accepted Answer

A)  $0
B)  $574
C)  $800
D)  $2,013
E)  $2,174F) B) and C)
G) A) and D)

Question 7

What is the change in the net working capital from 2011 to 2012?

Accepted Answer

A)  -$1,194
B)  $1,306
C)  $1,887
D)  $4,780
E)  $5,172F) All of the above
G) B) and C)

Question 8

What is the cash flow to creditors for 2012?

Accepted Answer

A)  -$353
B)  -$210
C)  $300
D)  $432
E)  $527F) A) and B)
G) A) and C)

Question 9

The managers of a firm wish to expand the firm's operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised. The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm. Write a short response to this request.

Accepted Answer

Debt financing will require cash outflow...

Question 10

Dee Dee's Marina is obligated to pay its creditors $6,400 today. The firm's assets have a current market value of $5,900. What is the current market value of the shareholders' equity?

Accepted Answer

A)  -$600
B)  -$500
C)  $0
D)  $500
E)  $600F) A) and E)
G) A) and D)

Question 11

What is the cash flow from assets for 2012?

Accepted Answer

A)  $1,230
B)  $1,580
C)  $1,770
D)  $1,810
E)  $1,980F) A) and C)
G) C) and D)

Question 12

Which one of the following is classified as an intangible fixed asset?

Accepted Answer

A)  accounts receivable
B)  production equipment
C)  building
D)  trademark
E)  inventoryF) B) and C)
G) D) and E)

Question 13

A positive cash flow to stockholders indicates which one of the following with certainty?

Accepted Answer

A)  The dividends paid exceeded the net new equity raised.
B)  The amount of the sale of common stock exceeded the amount of dividends paid.
C)  No dividends were distributed but new shares of stock were sold.
D)  Both the cash flow to assets and the cash flow to creditors must be negative.
E)  Both the cash flow to assets and the cash flow to creditors must be positive.F) B) and E)
G) C) and D)

Question 14

Which one of the following statements concerning net working capital is correct?

Accepted Answer

A)  Net working capital increases when inventory is purchased with cash.
B)  Net working capital must be a positive value.
C)  Total assets must increase if net working capital increases.
D)  A decrease in the cash balance also decreases net working capital.
E)  Net working capital is the amount of cash a firm currently has available for spending.F) A) and B)
G) A) and C)

Question 15

As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash flows?

Accepted Answer

Firms can have positive cash balances be...

Question 16

Cash flow from assets is also known as the firm's:

Accepted Answer

A)  capital structure.
B)  equity structure.
C)  hidden cash flow.
D)  free cash flow.
E)  historical cash flow.F) All of the above
G) B) and E)

Question 17

Four years ago, Velvet Purses purchased a mailing machine at a cost of $176,000. This equipment is currently valued at $64,500 on today's balance sheet but could actually be sold for $58,900. This is the only fixed asset the firm owns. Net working capital is $57,200 and long-term debt is $111,300. What is the book value of shareholders' equity?

Accepted Answer

A)  $4,800
B)  $7,700
C)  $10,400
D)  $222,600
E)  $233,000F) A) and E)
G) None of the above

Question 18

Suppose you are given the following information for Bayside Bakery: sales = $30,000; costs = $15,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the amount of the depreciation expense?

Accepted Answer

A)  $4,820
B)  $5,500
C)  $7,000
D)  $8,180
E)  $9,500F) A) and C)
G) A) and B)

Question 19

Boyer Enterprises had $200,000 in 2011 taxable income. What is the firm's average tax rate based on the rates shown in the following table?

Accepted Answer

A)  28.25 percent
B)  30.63 percent
C)  32.48 percent
D)  36.50 percent
E)  39.00 percentF) A) and D)
G) All of the above

Question 20

Which term relates to the cash flow which results from a firm's ongoing, normal business activities?

Accepted Answer

A)  operating cash flow
B)  capital spending
C)  net working capital
D)  cash flow from assets
E)  cash flow to creditorsF) A) and B)
G) None of the above

Exam 2: Financial Statements, Taxes, and Cash Flow

What is the taxable income for 2012?

Correct Answer
verified

Cash flow from assets is also known as the firm's:

Correct Answer
verified

A positive cash flow to stockholders indicates which one of the following with certainty?

Correct Answer
verified

Which one of the following will increase the cash flow from assets, all else equal?

Correct Answer
verified

What is the cash flow from assets for 2012?

Correct Answer
verified

What is the change in the net working capital from 2011 to 2012?

Correct Answer
verified

Boyer Enterprises had $200,000 in 2011 taxable income. What is the firm's average tax rate based on the rates shown in the following table?

Correct Answer
verified

Which one of the following statements concerning net working capital is correct?

Correct Answer
verified

Suppose you are given the following information for Bayside Bakery: sales = $30,000; costs = $15,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the amount of the depreciation expense?

Correct Answer
verified

Correct Answer
verified
Debt financing will require cash outflow...
View Answer

What is the change in net working capital from 2011 to 2012?

Correct Answer
verified

The 2011 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940. The 2012 balance sheet showed current assets of $1,640 and current liabilities of $1,140. What was the change in net working capital for 2012?

Correct Answer
verified

Dee Dee's Marina is obligated to pay its creditors $6,400 today. The firm's assets have a current market value of $5,900. What is the current market value of the shareholders' equity?

Correct Answer
verified

Which term relates to the cash flow which results from a firm's ongoing, normal business activities?

Correct Answer
verified

What is the amount of dividends paid in 2012?

Correct Answer
verified

As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash flows?

Correct Answer
verified
Firms can have positive cash balances be...
View Answer

The cash flow related to interest payments less any net new borrowing is called the:

Correct Answer
verified

Correct Answer
verified

What is the cash flow to creditors for 2012?

Correct Answer
verified

Which one of the following is classified as an intangible fixed asset?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

What is the taxable income for 2012?

Correct AnswerverifiedShow Answer

Cash flow from assets is also known as the firm's:

Correct AnswerverifiedShow Answer

A positive cash flow to stockholders indicates which one of the following with certainty?

Correct AnswerverifiedShow Answer

Which one of the following will increase the cash flow from assets, all else equal?

Correct AnswerverifiedShow Answer

What is the cash flow from assets for 2012?

Correct AnswerverifiedShow Answer

What is the change in the net working capital from 2011 to 2012?

Correct AnswerverifiedShow Answer

Boyer Enterprises had $200,000 in 2011 taxable income. What is the firm's average tax rate based on the rates shown in the following table?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning net working capital is correct?

Correct AnswerverifiedShow Answer

Suppose you are given the following information for Bayside Bakery: sales = $30,000; costs = $15,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the amount of the depreciation expense?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDebt financing will require cash outflow...View AnswerShow Answer

What is the change in net working capital from 2011 to 2012?

Correct AnswerverifiedShow Answer

The 2011 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940. The 2012 balance sheet showed current assets of $1,640 and current liabilities of $1,140. What was the change in net working capital for 2012?

Correct AnswerverifiedShow Answer

Dee Dee's Marina is obligated to pay its creditors $6,400 today. The firm's assets have a current market value of $5,900. What is the current market value of the shareholders' equity?

Correct AnswerverifiedShow Answer

Which term relates to the cash flow which results from a firm's ongoing, normal business activities?

Correct AnswerverifiedShow Answer

What is the amount of dividends paid in 2012?

Correct AnswerverifiedShow Answer

As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash flows?

Correct AnswerverifiedFirms can have positive cash balances be...View AnswerShow Answer

The cash flow related to interest payments less any net new borrowing is called the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the cash flow to creditors for 2012?

Correct AnswerverifiedShow Answer

Which one of the following is classified as an intangible fixed asset?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Debt financing will require cash outflow...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Firms can have positive cash balances be...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified