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MARSHALL / Business / Bus 323 / What is financial leverage give formula?

What is financial leverage give formula?

What is financial leverage give formula?

Description

School: Marshall University
Department: Business
Course: Principles of Finance
Professor: Shaorong zhang
Term: Spring 2016
Tags: finance
Cost: 50
Name: FIN 323 : Final Exam ( Essential of Corporate Finance )
Description: Final Exam
Uploaded: 04/27/2016
37 Pages 87 Views 3 Unlocks
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Final Exam Question: Essential of  Corporate Finance  


What is financial leverage give formula?



Financial leverage:

1. A. increases as the net working capital increases.

2. B. is equal to the market value of a firm divided by the firm's book  value.

3. C. is inversely related to the level of debt.

4. D. is the ratio of a firm's revenues to its fixed expenses.

5. E. increases the potential return to the shareholders. Which one of the following is an intangible fixed asset?

1. A. Inventory

2. B. Machinery

3. C. Copyright

4. D. Account receivable

5. E. Building

Shareholders' equity is equal to:


Which one of the following will decrease the net working capital of a firm?



1. A. total assets plus total liabilities.

2. B. net fixed assets minus total liabilities.

3. C. net fixed assets minus long-term debt plus net working capital. 4. D. net working capital plus total assets.

5. E. total assets minus net working capital.

Which one of the following will decrease the net working capital of a firm?

1. A. Obtaining a three-year loan and using the proceeds to buy inventory 2. B. Collecting a payment from a credit customer We also discuss several other topics like What type of surfaces do infants prefer walking on?

3. C. Obtaining a five-year loan to buy equipment

4. D. Selling inventory at a profit


How do you calculate net working capital?



5. E. Making a payment on a long-term debt

Operating cash flow is defined as:

1. A. a firm's net profit over a specified period of time.

2. B. the cash that a firm generates from its normal business activities. 3. C. a firm's operating margin. If you want to learn more check out What advantages a cio bring to a business?

4. D. the change in the net working capital over a stated period of time. If you want to learn more check out Why were so many people injured during the chelyabinsk meteor event?

5. E. the cash that is generated and added to retained earnings. Which one of the following statements is correct?

1. A. Shareholders' equity is the residual value of a firm.

2. B. Net working capital must be a positive value.

3. C. An increase in cash reduces the liquidity of a firm.

4. D. Equipment is generally considered a highly liquid asset. 5. E. Depreciation increases total assets.

Which one of the following terms is defined as the total tax paid  divided by the total taxable income?

1. A. Average tax rate

2. B. Variable tax rate

3. C. Marginal tax rate

4. D. Absolute tax rate

5. E. Contingent tax rate

Which one of the following decreases net income but does not affect the operating cash flow of a firm that owes no taxes for the current  year? If you want to learn more check out How does this mean we are progressing as a human race?

1. A. Indirect cost

2. B. Direct cost

3. C. Noncash item

4. D. Period cost

5. E. Variable cost

Which one of the following is included in net working capital? 1. A. Land

2. B. Accounts payable

3. C. Equipment

4. D. Depreciation We also discuss several other topics like What are the most common myths about communication?

5. E. Dividend

Which one of the following statements concerning the balance sheet is correct?

1. A. Total assets equal total liabilities minus total equity.

2. B. Net working capital is equal total assets minus total liabilities. 3. C. Assets are listed in descending order of liquidity.

4. D. Current assets are equal to total assets minus net working capital.

5. E. Shareholders' equity is equal to net working capital minus net fixed  assets plus long-term debt.

Which one of the following statements concerning market and book  values is correct?

1. A. The market value of accounts receivable is generally higher than the book value of those receivables.

2. B. The market value tends to provide a better guide to the actual worth of an asset than does the book value.

3. C. The market value of fixed assets will always exceed the book value  of those assets. Don't forget about the age old question of What is meant by the multistep nature of cancer in terms of histology?

4. D. Book values represent the amount of cash that will be received if an  asset is sold.

5. E. The current book value of equipment purchased last year is equal to  the initial cost of the equipment.

Delivery trucks are classified as:

1. A. noncash expenses.

2. B. current liabilities.

3. C. current assets.

4. D. tangible fixed assets.

5. E. intangible fixed assets.

Highly liquid assets:

1. A. increase the probability a firm will face financial distress. 2. B. appear on the right side of a balance sheet.

3. C. generally produce a high rate of return.

4. D. can be sold quickly at close to full value.

5. E. include all intangible assets.

Which one of the following is included in the market value of a firm  but not in the book value?

1. A. Raw materials

2. B. Partially built inventory

3. C. Tax liability

4. D. Reputation of the firm

5. E. Value of a partially depreciated machine

An income statement prepared according to GAAP:

1. A. reflects the net cash flows of a firm over a stated period of time. 2. B. reflects the financial position of a firm as of a particular date. 3. C. distinguishes variable costs from fixed costs.

4. D. records revenue when payment for a sale is received.

5. E. records expenses based on the matching principle.

The financial statement that summarizes a firm's accounting value  as of a particular date is called the:

1. A. income statement.

2. B. cash flow statement.

3. C. liquidity position.

4. D. balance sheet.

5. E. periodic operating statement.

Which one of the following statements is correct concerning a firm's  fixed assets?

1. A. The market value is the expected selling price in today's economy. 2. B. The market value is affected by the accounting method selected.

3. C. The market value is equal to the initial cost minus the depreciation  to date.

4. D. The book value is equal to the market value minus the accumulated  depreciation.

5. E. The book value is the greater of the initial cost or the current market value.

Which one of the following will decrease the liquidity level of a  firm?

1. A. Cash purchase of inventory

2. B. Credit sale of inventory

3. C. Cash sale of inventory

4. D. Collection of an account receivable

5. E. Proceeds from a long-term loan

Which one of the following is the tax rate that applies to the next  dollar of taxable income that a firm earns?

1. A. Average tax rate

2. B. Variable tax rate

3. C. Marginal tax rate

4. D. Absolute tax rate

5. E. Contingent tax rate

Over the past year, a firm decreased its current assets and  increased its current liabilities. As a result, the firm's net working  capital:

1. A. had to increase.

2. B. had to decrease.

3. C. could have remained constant if the amount of the decrease in  current assets equaled the amount of the increase in current liabilities.

4. D. could have either increased, decreased, or remained constant.

5. E. was unaffected as the changes occurred in the firm's current  accounts.

Net working capital is defined as:

1. A. the depreciated book value of a firm's fixed assets.

2. B. the value of a firm's current assets.

3. C. available cash minus current liabilities.

4. D. total assets minus total liabilities.

5. E. current assets minus current liabilities.

Which one of the following is an equity account? 1. A. Paid-in surplus

2. B. Bonds payable

3. C. Patent

4. D. Depreciation

5. E. Net fixed assets

All else equal, an increase in which one of the following will  decrease owners' equity?

1. A. Increase in inventory

2. B. Increase in accounts payable

3. C. Increase in accounts receivable

4. D. Increase in net working capital

5. E. Increase in net fixed assets

Cash flow to stockholders is defined as:

1. A. cash flow from assets plus cash flow to creditors. 2. B. operating cash flow minus cash flow to creditors.

3. C. dividends paid plus the change in retained earnings. 4. D. dividends paid minus net new equity raised.

5. E. net income minus the addition to retained earnings.

Which one of the following has nearly the same meaning as free  cash flow?

1. A. Net income

2. B. Cash flow from assets

3. C. Operating cash flow

4. D. Cash flow to shareholders

5. E. Addition to retained earnings

Cash flow to creditors is defined as:

1. A. interest paid minus net new borrowing.

2. B. interest paid plus net new borrowing.

3. C. the operating cash flow minus net capital spending minus change in  net working capital.

4. D. dividends paid plus net new borrowing.

5. E. cash flow from assets plus net new equity.

The accounting statement that measures the revenues, expenses,  and net income of a firm over a period of time is called the:

1. A. statement of cash flows.

2. B. income statement.

3. C. GAAP statement.

4. D. balance sheet.

5. E. net working capital schedule.

The market value of a firm's fixed assets:

1. A. must exceed the book value of those assets.

2. B. is more predictable than the book value of those assets.

3. C. in addition to the firm's net working capital reflects the true value of  a firm.

4. D. is decreased annually by the depreciation expense.

5. E. is equal to the estimated current cash value of those assets. An increase in which one of the following will increase net income?

1. A. Fixed costs

2. B. Depreciation

3. C. Marginal tax rate

4. D. Revenue

5. E. Dividends

Cash flow from assets is defined as:

1. A. the cash flow to shareholders minus the cash flow to creditors.

2. B. operating cash flow plus the cash flow to creditors plus the cash flow to shareholders.

3. C. operating cash flow minus the change in net working capital minus  net capital spending.

4. D. operating cash flow plus net capital spending plus the change in net working capital.

5. E. cash flow to shareholders minus net capital spending plus the  change in net working capital.

Which one of the following is included in net working capital? 1. A. Newly purchased equipment with a useful life of 6 years 2. B. Mortgage on a building payable over the next 12 years 3. C. Interest on a long-term debt

4. D. 10-year bonds issued to the general public

5. E. Invoice from a supplier for inventory purchased

Which one of the following indicates that a firm has generated  sufficient internal cash flow to finance its entire operations for the  period?

1. A. Positive operating cash flow

2. B. Negative cash flow to creditors

3. C. Positive cash flow to stockholders

4. D. Negative net capital spending

5. E. Positive cash flow from assets

Cash flow to creditors is equal to:

1. A. cash flow from assets plus cash flow to stockholders.

2. B. beginning total liabilities minus ending total liabilities plus interest  paid.

3. C. beginning long-term debt minus ending long-term debt plus interest  paid.

4. D. ending total debt minus beginning total debt plus interest paid.

5. E. ending long-term debt minus beginning long-term debt plus interest  paid.

Depreciation does which one of the following for a profitable firm? 1. A. Increases net income

2. B. Increases net fixed assets

3. C. Decreases net working capital

4. D. Lowers taxes

5. E. Has no effect on net income.

Red Roofs, Inc. has current liabilities of $24,300 and accounts  receivable of $7,800. The firm has total assets of $43,100 and net  fixed assets of $23,700. The owners' equity has a book value of  $21,400. What is the amount of the net working capital?

1. A. $5,100

2. B. -$4,900

3. C. $6,500

4. D. $18,800

5. E. -$2,600

The Braxton Co. has beginning long-term debt of $64,500, which is  the principal balance of a loan payable to Centre Bank. During the  year, the company paid a total of $16,300 to the bank, including  $4,100 of interest. The company also borrowed $11,000. What is the value of the ending long-term debt?

1. A. $45,100

2. B. $53,300

3. C. $58,200

4. D. $63,300

5. E. $85,900

Net capital spending is equal to:

1. A. ending net fixed assets minus beginning net fixed assets plus  depreciation.

2. B. beginning net fixed assets minus ending net fixed assets plus  depreciation.

3. C. ending net fixed assets minus beginning net fixed assets minus  depreciation.

4. D. ending total assets minus beginning total assets plus depreciation.

5. E. ending total assets minus beginning total assets minus depreciation. The matching principle states that:

1. A. costs should be recorded on the income statement whenever those  costs can be reliably determined.

2. B. costs should be recorded when paid.

3. C. the costs of producing an item should be recorded when the sale of  that item is recorded as revenue.

4. D. sales should be recorded when the payment for that sale is  received.

5. E. sales should be recorded when the earnings process is virtually  completed and the value of the sale can be determined.

Which one of the following statements related to the income  statement is correct?

1. A. Depreciation has no effect on taxes.

2. B. Interest paid is a noncash item.

3. C. Taxable income must be a positive value.

4. D. Net income is distributed either to dividends or retained earnings.

5. E. Taxable income plus interest and depreciation equals earnings  before interest and taxes.

Tressler Industries opted to repurchase 5,000 shares of stock last  year in lieu of paying a dividend. The cash flow statement for last  year must have which one of the following assuming that no new  shares were issued?

1. A. Positive operating cash flow

2. B. Negative cash flow from assets

3. C. Negative cash flow to stockholders

4. D. Negative operating cash flow

5. E. Positive cash flow to stockholders

Donner United has total owners' equity of $18,800. The firm has  current assets of $23,100, current liabilities of $12,200, and total  assets of $36,400. What is the value of the long-term debt?

1. A. $5,400

2. B. $12,500

3. C. $13,700

4. D. $29,800

5. E. $43,000

If a firm has a negative cash flow from assets every year for several  years, the firm:

1. A. may be continually increasing in size.

2. B. must also have a negative cash flow from operations each year. 3. C. is operating at a high level of efficiency.

4. D. is repaying debt every year.

5. E. has annual net losses.

Pete's Warehouse has net working capital of $2,400, total assets of  $19,300, and net fixed assets of $10,200. What is the value of the  current liabilities?

1. A. -$6,700

2. B. -$2,900

3. C. $2,900

4. D. $6,700

5. E. $11,500

A negative cash flow to stockholders indicates a firm: 1. A. had a negative cash flow from assets.

2. B. had a positive cash flow to creditors.

3. C. paid dividends that exceeded the amount of the net new equity. 4. D. repurchased more shares than it sold.

5. E. received more from selling stock than it paid out to shareholders. The corporate tax structure in the U.S. is based on a:

1. A. maximum tax rate of 38 percent.

2. B. minimum tax rate of 10 percent.

3. C. flat rate of 34 percent for the highest income earners. 4. D. flat-rate tax.

5. E. modified flat-rate tax.

Morgantown Movers has net working capital of $11,300, current  assets of $31,200, equity of $53,400, and long-term debt of  $11,600. What is the amount of the net fixed assets?

1. A. $31,800

2. B. $32,900

3. C. $45,500

4. D. $48,100

5. E. $53,700

Firms that compile financial statements according to GAAP:

1. A. record income and expenses at the time they affect the firm's cash  flows.

2. B. have no discretion over the timing of recording either revenue or  expense items.

3. C. must record all expenses when incurred.

4. D. can still manipulate their earnings to some degree.

5. E. record both income and expenses as soon as the amount for each  can be ascertained.

An increase in which one of the following will increase operating  cash flow for a profitable, tax-paying firm?

1. A. Fixed expenses

2. B. Interest paid

3. C. Net capital spending

4. D. Inventory

5. E. Depreciation

Baugh and Essary reports the following account balances: inventory  of $17,600, equipment of $128,300, accounts payable of $24,700,  cash of $11,900, and accounts receivable of $31,900. What is the  amount of the current assets?

1. A. $46,700

2. B. $56,000

3. C. $61,400

4. D. $175,000

5. E. $199,700

Which one of the following will increase cash flow from assets but  not affect the operating cash flow?

1. A. Increase in depreciation

2. B. Increase in accounts receivable

3. C. Sale of a fixed asset

4. D. Decrease in cost of goods sold

5. E. Increase in sales

Early Works had $87,600 in net fixed assets at the beginning of the  year. During the year, the company purchased $6,400 in new  equipment. It also sold, at a price of $2,300, some old equipment  with a book value of $1,100. The depreciation expense for the year  was $3,700. What is the net fixed asset balance at the end of the  year?

1. A. $76,400

2. B. $78,800

3. C. $80,000

4. D. $87,200

5. E. $89,400

The Draiman, Inc. currently has $3,600 in cash. The company owes  $41,800 to suppliers for merchandise and $21,500 to the bank for a  long-term loan. Customers owe The Draiman $18,000 for their  purchases. The inventory has a book value of $53,300 and an  estimated market value of $61,200. If the store compiled a balance  sheet as of today, what would be the book value of the current  assets?

1. A. $46,800

2. B. $55,600

3. C. $64,700

4. D. $74,900

5. E. $96,500

Donut Delite has total assets of $31,300, long-term debt of $8,600,  net fixed assets of $19,300, and owners' equity of $21,100. What is  the value of the net working capital?

1. A. $9,800

2. B. $10,400

3. C. $18,900

4. D. $21,300

5. E. $23,200

The Toy Store has beginning retained earnings of $28,975. For the  year, the company earned net income of $4,680 and paid dividends  of $1,600. The company also issued $3,000 worth of new stock.  What is the value of the retained earnings account at the end of the  year?

1. A. $20,445

2. B. $22,695

3. C. $27,375

4. D. $32,055

5. E. $35,255

Plato's Foods has ending net fixed assets of $84,400 and beginning  net fixed assets of $79,900. During the year, the firm sold assets

with a total book value of $13,600 and also recorded $14,800 in  depreciation expense. How much did the company spend to buy new fixed assets?

1. A. -$23,900

2. B. $3,300

3. C. $32,900

4. D. $36,800

5. E. $37,400

The concept of marginal taxation is best exemplified by which one  of the following?

1. A. Kirby's paid $120,000 in taxes while its primary competitor paid only $80,000 in taxes.

2. B. Johnson's Retreat paid only $45,000 on total revenue of $570,000  last year.

3. C. Mitchell's Grocer increased its sales by $52,000 last year and had to  pay an additional $16,000 in taxes.

4. D. Burlington Centre paid no taxes last year due to carryforward losses.

5. E. The Blue Moon paid $2.20 in taxes for every $10 of revenue last  year.

Which one of the following relates to a negative change in net  working capital?

1. A. Increase in the inventory level

2. B. Sale of net fixed assets

3. C. Purchase of net fixed assets

4. D. Increase in current assets and decrease in current liabilities for the  period

5. E. Increase in current liabilities with no change in current assets for the period

Which two of the following determine when revenue is recorded on  the financial statements based on the recognition principle? I.  Payment is collected for the sale of a good or service; II. The  earnings process is virtually complete; III. The value of a sale can be reliably determined; IV. The product is physically delivered to the  buyer.

1. A. I and II only

2. B. I and IV only

3. C. II and III only

4. D. II and IV only

5. E. I and III only

The recognition principle states that:

1. A. costs should be recorded on the income statement whenever those  costs can be reliably determined.

2. B. costs should be recorded when paid.

3. C. the costs of producing an item should be recorded when the sale of  that item is recorded as revenue.

4. D. sales should be recorded when the payment for that sale is  received.

5. E. sales should be recorded when the earnings process is virtually  completed and the value of the sale can be determined.

Kroeger Exporters has total assets of $74,300, net working capital  of $22,900, owners' equity of $38,600, and long-term debt of  $23,900. What is the value of the current assets?

1. A. $21,600

2. B. $24,300

3. C. $38,900

4. D. $34,700

5. E. $46,100

Which one of the following will increase the cash flow from assets  for a tax-paying firm, all else constant?

1. A. An increase in net capital spending

2. B. A decrease in the cash flow to creditors

3. C. An increase in depreciation

4. D. An increase in the change in net working capital

5. E. A decrease in dividends paid

The Pier Import Store has cash of $34,600 and accounts receivable  of $54,200. The inventory cost $92,300 and can be sold today for  $146,900. The fixed assets were purchased at a cost of $234,500 of  which $107,900 has been depreciated. The fixed assets can be sold  today for $199,000. What is the total book value of the firm's  assets?

1. A. $127,800

2. B. $307,700

3. C. $346,800

4. D. $382,300

5. E. $415,600

Last year, The Pizza Joint added $4,100 to retained earnings from  sales of $93,600. The company had costs of $74,400, dividends of  $2,500, and interest paid of $1,400. The tax rate was 34 percent.  What was the amount of the depreciation expense?

1. A. $7,300

2. B. $7,500

3. C. $7,800

4. D. $8,100

5. E. $8,400

The financial statements of Backwater Marina reflect depreciation  expenses of $41,600 and interest expenses of $27,900 for the year.  The current assets increased by $31,800 and the net fixed assets  increased by $28,600. What is the amount of the net capital  spending for the year?

1. A. $7,000

2. B. $21,600

3. C. $28,600

4. D. $60,400

5. E. $70,200

For the year, Movers United has net income of $31,800, net new  equity of $7,500, and an addition to retained earnings of $24,200.  What is the amount of the dividends paid?

1. A. $100

2. B. $7,500

3. C. $7,600

4. D. $15,100

5. E. $16,700

Paddle Fans & More has a marginal tax rate of 34 percent and an  average tax rate of 23.7 percent. If the firm earns $138,500 in  taxable income, how much will it owe in taxes?

1. A. $31,366.67

2. B. $31,500.00

3. C. $32,824.50

4. D. $39,957.25

5. E. $47,090.00

Roscoe's purchased new machinery three years ago for $1.8 million.  The machinery can be sold to Stewart's today for $1.2 million.  Roscoe's current balance sheet shows net fixed assets of $960,000,  current liabilities of $348,000, and net working capital of $121,000.  If all the current assets were liquidated today, the company would  receive $518,000 cash. The book value of the firm's assets today is  _____ and the market value is ____.

1. A. $1,081,000; $1,308,000

2. B. $1,081,000; $1,718,000

3. C. $1,307,000; $1,429,000

4. D. $1,429,000; $1,308,000

5. E. $1,429,000; $1,718,000

The Embroidery Shoppe had beginning retained earnings of  $18,670. During the year, the company reported sales of $83,490,  costs of $68,407, depreciation of $8,200, dividends of $950, and  interest paid of $478. The tax rate is 35 percent. What is the  retained earnings balance at the end of the year?

1. A. $21,883.25

2. B. $22,193.95

3. C. $22,833.24

4. D. $23,783.24

5. E. $30,393.95

Precision Manufacturing had the following operating results for  2014: sales = $38,900; cost of goods sold = $24,600; depreciation  expense = $1,700; interest expense = $1,400; dividends paid =  $1,000. At the beginning of the year, net fixed assets were $14,300,  current assets were $8,700, and current liabilities were $6,600. At  the end of the year, net fixed assets were $13,900, current assets  were $9,200, and current liabilities were $7,400. The tax rate for  2014 was 34 percent. What is the cash flow from

1. A. $8,047

2. B. $8,292

3. C. $8,658

4. D. $9,492

5. E. $9,964

ACE, Inc. incurred depreciation expenses of $21,900 last year. The  sales were $811,400 and the addition to retained earnings was  $14,680. The firm paid interest of $9,700 and dividends of $10,100.  The tax rate was 40 percent. What was the amount of the costs  incurred by the firm?

1. A. $665,200.00

2. B. $689,407.67

3. C. $742,306.08

4. D. $738,500.00

5. E. $780,400.21

The December 31, 2013, balance sheet of Suzette's Market showed  long-term debt of $638,100 and the December 31, 2014, balance  sheet showed long-term debt of $574,600. The 2010 income  statement showed an interest expense of $42,300. What was the  firm's cash flow to creditors during 2014?

1. A. $21,200

2. B. $26,700

3. C. $54,900

4. D. $102,400

5. E. $105,800

Able Co. has $218,000 in taxable income and Bravo Co. has  $5,600,000 in taxable income. Suppose both firms have identified a  new project that will increase taxable income by $12,000. The  additional project will increase Able Co.'s taxes by _____ and Bravo  Co.'s taxes by ____.

1. A. $1,800; $1,800

2. B. $4,080; $4,080

3. C. $4,080; $4,680

4. D. $4,680; $4,080

5. E. $4,680; $4,680

Bama & Co. owes a total of $21,684 in taxes for this year. The  taxable income is $61,509. If the firm earns $100 more in income, it  will owe an additional $56 in taxes. What is the average tax rate on  income of $71,609?

1. A. 28.00 percent

2. B. 30.33 percent

3. C. 33.33 percent

4. D. 35.00 percent

5. E. 35.29 percent

Andersen's Nursery has sales of $318,400, costs of $199,400,  depreciation expense of $28,600, interest expense of $1,100, and a  tax rate of 34 percent. The firm paid out $16,500 in dividends. What  is the addition to retained earnings?

1. A. $36,909

2. B. $42,438

3. C. $44,141

4. D. $47,208

5. E. $47,615

Six months ago, Benders Gym repurchased $20,000 of its common  stock. The company pays regular quarterly dividends totaling  $8,500 per quarter. What is the amount of the cash flow to  stockholders for the past year if no additional shares were issued?

1. A. -$10,000

2. B. $20,000

3. C. $28,500

4. D. $30,000

5. E. $54,000

Leslie Printing has net income of $26,310 for the year. At the  beginning of the year, the firm had common stock of $55,000, paid in surplus of $11,200, and retained earnings of $48,420. At the end  of the year, the firm had total equity of $142,430. The firm does not  pay dividends. What is the amount of the net new equity raised  during the year?

1. A. $1,500

2. B. $2,500

3. C. $2,700

4. D. $48,420

5. E. $48,310

The Good Life Store has sales of $79,600. The cost of goods sold is  $48,200 and the other costs are $18,700. Depreciation is $8,300 and the tax rate is 34 percent. What is the net income?

1. A. $2,904

2. B. $8,382

3. C. $11,204

4. D. $14,660

5. E. $16,682

For the past year, LP Gas, Inc. had cash flow from assets of $38,100  of which $21,500 flowed to the firm's stockholders. The interest paid was $2,300. What is the amount of the net new borrowing?

1. A. -$14,300

2. B. -$9,700

3. C. $12,300

4. D. $14,300

5. E. $18,900

Holly Farms has sales of $581,600, costs of $479,700, depreciation  expense of $32,100, and interest paid of $8,400. The tax rate is 42  percent. How much net income did the firm earn for the period?

1. A. $25,788

2. B. 35,612

3. C. $43,380

4. D. $45,671

5. E. $45,886

During the past year, Arther Anderson Services paid $360,800 in  interest along with $48,000 in dividends. The company issued  $230,000 of stock and $200,000 of new debt. The company reduced  the balance due on the old debt by $225,000. What is the amount of the cash flow to creditors?

1. A. -$88,200

2. B. $51,400

3. C. $161,800

4. D. $385,800

5. E. $585,800

The financial statements of Jame's Auto Repair reflect cash of  $14,600, accounts receivable of $11,500, accounts payable of  $22,900, inventory of $17,800, long-term debt of $42,000, and net  fixed assets of $63,800. The firm estimates that if it wanted to  cease operations today it could sell the inventory for $35,000 and  the fixed assets for $49,000. The firm could also collect 100 percent  of its receivables. What is the market value of the assets?

1. A. $32,800

2. B. $39,900

3. C. $74,000

4. D. $95,500

5. E. $110,100

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year. During that time, the firm invested $28,000 in net working capital and incurred net  capital spending of $47,900. What is the amount of the cash flow to  stockholders for the last year?

1. A. -$171,500

2. B. -$86,700

3. C. $21,200

4. D. $39,700

5. E. $111,100

The Carpentry Shop has sales of $398,600, costs of $254,800,  depreciation expense of $26,400, interest expense of $1,600, and a  tax rate of 34 percent. What is the net income for this firm?

1. A. $61,930

2. B. $66,211

3. C. $67,516

4. D. $76,428

5. E. $83,219

Daniel's Market has sales of $36,600, costs of $28,400, depreciation  expense of $3,100, and interest expense of $1,500. If the tax rate is  34 percent, what is the operating cash flow, OCF?

1. A. $4,811

2. B. $5,279

3. C. $6,466

4. D. $6,976

5. E. $7,013

During the year, The Dalton Firm had sales of $3,210,000. Cost of  goods sold, administrative and selling expenses, and depreciation  expenses were $2,540,000, $389,000, and $112,000, respectively. In addition, the company had an interest expense of $118,000 and a  tax rate of 34 percent. (Ignore any tax loss carryback or  carryforward provisions.) What is its operating cash flow?

1. A. $263,660

2. B. $271,420

3. C. $273,330

4. D. $285,400

5. E. $287,700

The Play House's December 31, 2013, balance sheet showed net  fixed assets of $1,238,000 and the December 31, 2014, balance  sheet showed net fixed assets of $1,416,000. The company's 2014

income statement showed a depreciation expense of $214,600.  What was the firm's net capital spending for 2014?

1. A. $36,600

2. B. $42,400

3. C. $392,600

4. D. $404,400

5. E. $416,600

A firm has earnings before interest and taxes of $25,380 with a net  income of $14,220. The taxes amounted to $5,400 for the year.  During the year, the firm paid out $43,800 to pay off existing debt  and then later borrowed an additional $24,000. What is the amount  of the cash flow to creditors?

1. A. -$14,040

2. B. $19,800

3. C. $25,560

4. D. $28,440

5. E. $29,790

Gorman Distributors shows the following information on its 2014  income statement: sales = $317,800; costs = $211,400; other  expenses = $18,500; depreciation expense = $31,200; interest  expense = $2,100; taxes = $18,600; dividends = $12,000. In  addition, you're told that the firm issued $4,500 in new equity  during 2014, and redeemed $6,500 in outstanding long-term debt. If net fixed assets increased by $7,400 during the year, what was the  addition to net working capital?

1. A. $17,900

2. B. $14,600

3. C. $15,800

4. D. $16,200

5. E. $17,400

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate  is 34 percent?

1. A. $87,620

2. B. $89,540

3. C. $91,220

4. D. $93,560

5. E. $95,240

The owners' equity for The Deer Store was $58,900 at the beginning of the year. During the year, the company had aftertax income of  $4,200, of which $3,200 was paid in dividends. Also during the year,  the company repurchased $6,500 of stock from one of the  shareholders. What is the value of the owners' equity at year end?

1. A. $53,400

2. B. $45,000

3. C. $59,900

4. D. $84,400

5. E. $90,900

The balance sheet of a firm shows current liabilities of $56,300 and  long-term debt of $289,200 as of last year. Current liabilities are  $76,900 and long-term debt is $248,750 as of today, which is the  end of the current year. The financial statements for the current

year reflect an interest paid amount of $29,700 and dividends of  $19,000. What is the amount of the net new borrowing?

1. A. -$40,450

2. B. $40,450

3. C. $64,750

4. D. $70,150

5. E. $78,250

Chevelle, Inc. has sales of $487,000 and costs of $394,500. The  depreciation expense is $43,800. Interest paid equals $18,200 and  dividends paid equal $6,500. The tax rate is 35 percent. What is the  addition to retained earnings?

1. A. $10,775

2. B. $11,460

3. C. $13,120

4. D. $13,325

5. E. $15,450

Lester's Fried Chick'n purchased its building 11 years ago at a cost  of $139,000. The building is currently valued at $179,000. The firm  has other fixed assets that cost $66,000 and are currently valued at  $58,000. To date, the firm has recorded a total of $79,000 in  depreciation on the various assets. The company has current  liabilities of $36,600 and net working capital of $18,400. What is the total book value of the firm's assets?

1. A. $181,000

2. B. $241,000

3. C. $331,000

4. D. $339,000

5. E. $379,000

The Paint Ball Range, Inc. paid $30,500 in dividends and $7,600 in  interest over the past year. Sales totaled $211,800 with costs of  $167,900. The depreciation expense was $16,500. The applicable  tax rate is 34 percent. What is the amount of the operating cash  flow?

1. A. $14,232

2. B. $15,306

3. C. $28,222

4. D. $37,168

5. E. $40,568

Gino's Winery has net working capital of $29,800, net fixed assets of $64,800, current liabilities of $34,700, and long-term debt of  $23,000. What is the value of the owners' equity?

1. A. $36,900

2. B. $66,700

3. C. $71,600

4. D. $89,400

5. E. $106,300

Bridgewater Furniture has sales of $811,000, costs of $658,000, and interest paid of $21,800. The depreciation expense is $56,100 and  the tax rate is 34 percent. At the beginning of the year, the firm had retained earnings of $318,300 and common stock of $250,000. At  the end of the year, the firm has retained earnings of $322,500 and  common stock of $280,000. What is the amount of the dividends  paid for the year?

1. A. $15,266

2. B. $19,466

3. C. $31,566

4. D. $41,066

5. E. $45,366

Miser Materials paid $27,500 in dividends and $28,311 in interest  over the past year while net working capital increased from $13,506 to $18,219. The company purchased $42,000 in net new fixed assets and had depreciation expenses of $16,805. During the year, the firm issued $25,000 in net new equity and paid off $21,000 in long-term  debt. What is the amount of the cash flow from assets?

1. A. $21,811

2. B. $30,811

3. C. $36,189

4. D. $49,811

5. E. 51,811

Redneck Farm Equipment owes $48,329 in tax on a taxable income  of $549,600. The company has determined that it will owe $56,211  in tax if its taxable income rises to $565,000. What is the marginal  tax rate at this level of income?

1. A. 9.95 percent

2. B. 30.00 percent

3. C. 30.67 percent

4. D. 51.03 percent

5. E. 51.18 percent

The balance sheet of a firm shows beginning net fixed assets of  $348,200 and ending net fixed assets of $371,920. The depreciation  expense for the year is $46,080 and the interest expense is  $11,460. What is the amount of the net capital spending?

1. A. -$22,360

2. B. -$4,780

3. C. $23,720

4. D. $58,340

5. E. $69,800

Andre's Dog House had current assets of $67,200 and current  liabilities of $71,100 last year. This year, the current assets are  $82,600 and the current liabilities are $85,100. The depreciation  expense for the past year is $9,600 and the interest paid is $8,700.  What is the amount of the change in net working capital?

1. A. -$2,800

2. B. -$1,400

3. C. $1,400

4. D. $2,100

5. E. $2,800

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