Ch. 1 & 2 HW

At the beginning of the year, a firm has current assets of $315 and current liabilities of $219. At the end of the year, the current assets are $467 and the current liabilities are $259. What is the change in net working capital?

$112

For the past year, Kayla, Inc., has sales of $44,042, interest expense of $2,918, cost of goods sold of $14,559, selling and administrative expense of $10,626, and depreciation of $4,675. If the tax rate is 35 percent, what is the operating cash flow?

$14,915

For the past year, Momsen, Ltd., had sales of $47,552, interest expense of $4,322, cost of goods sold of $17,709, selling and administrative expense of $12,336, and depreciation of $7,285. If the tax rate was 40 percent, what was the company's net income?

$3,540

You are examining a company's balance sheet and find that it has total assets of $19,915, a cash balance of $1,965, inventory of $4,625, current liabilities of $5,253 and accounts receivable of $2,493. What is the company's net working capital?

$3,830

Thornton, Inc., had taxable income of $128,852 for the year. The company's marginal tax rate was 34 percent and its average tax rate was 24.3 percent. How much did the company have to pay in taxes for the year?

$31,311

HUD, Co. had a beginning retained earnings of $30,800. For the year, the company had net income of $7,415 and paid dividends of $3,025. The company also issued $5,175 in new stock during the year. What is the ending retained earnings balance?

$35,190

One advantage of the corporate form of organization is the:

ability to raise larger sums of equity capital than other organizational forms.

The primary goal of financial management is to maximize:

the market value of existing stock.

Which one of the following is a working capital decision?

How much cash should the firm keep in reserve?

The tax rates for a particular year are shown below: Taxable Income ; Tax Rate $0 - 50,000 ; 15% 50,001 - 75,000 ; 25% 75,001 - 100,000 ; 34% 100,001 - 335,000 ; 39% What is the average tax rate for a firm with taxable income of $125,013?

25.60%

A corporation:

is a legal entity separate from its owners.

Maria is the sole proprietor of an antique store that is located in a rented warehouse. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and apply the proceeds to the debt II. Sell the lighting fixtures from the building and apply the proceeds to the debt III. Withdraw funds from Maria's personal account at the bank to pay the store's debt IV. Sell any assets Maria personally owns and apply the proceeds to the store's debt

I, III, and IV only

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s?

Corporate accounting and financial fraud

Which one of the following is a capital structure decision?

Establishing the preferred debt-equity level

Which one of the following is an advantage of being a limited partner?

Losses limited to capital invested

What is the primary goal of financial management for a sole proprietorship?

Maximize the market value of the equity

Probably the least effective means of aligning management goals with shareholder interests is:

automatically increasing management salaries on an annual basis.

The Sarbanes-Oxley Act of 2002 has:

essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

The daily financial operations of a firm are primarily controlled by managing the:

working capital.

At the beginning of the year, long-term debt of a firm is $270 and total debt is $320. At the end of the year, long-term debt is $250 and total debt is $330. The interest paid is $16. What is the amount of the cash flow to creditors?

$36

Ivan's, Inc., paid $498 in dividends and $594 in interest this past year. Common stock increased by $204 and retained earnings decreased by $130. What is the net income for the year?

$368

You find the following financial information about a company: net working capital = $1,287; fixed assets = $7,809; total assets = $11,942; and long-term debt = $4,589. What is the company's total equity?

$4,507

Disturbed, Inc., had the following operating results for the past year: sales = $22,600; depreciation = $1,340; interest expense = $1,080; costs = $16,505. The tax rate for the year was 35 percent. What was the company's operating cash flow?

$4,809

Last year, Bad Tattoo Co. had additions to retained earnings of $4,950 on sales of $96,050. The company had costs of $76,050, dividends of $3,100, and interest expense of $2,200. If the tax rate was 38 percent, what the depreciation expense?

$4,816

At the beginning of the year, Shinedown, Corp., had a long-term debt balance of $46,255. During the year, the company repaid a long-term loan in the amount of $11,930. The company paid $4,415 in interest during the year, and opened a new long-term loan for $10,565. How much is the ending long-term debt account on the company's balance sheet?

$44,890

Your firm has net income of $351 on total sales of $1,440. Costs are $790 and depreciation is $110. The tax rate is 35 percent. The firm does not have interest expenses. What is the operating cash flow?

$461

Peggy Grey's Cookies has net income of $380. The firm pays out 35 percent of the net income to its shareholders as dividends. During the year, the company sold $83 worth of common stock. What is the cash flow to stockholders?

$50.00

A firm has common stock of $85, paid-in surplus of $210, total liabilities of $385, current assets of $340, and net fixed assets of $550. What is the amount of the shareholders' equity?

$505

The tax rates are as shown below: Taxable Income ; Tax Rate $0 - 50,000 ; 15% 50,001 - 75,000 ; 25% 75,001 - 100,000 ; 34% 100,001 - 335,000 ; 39% Your firm currently has taxable income of $81,000. How much additional tax will you owe if you increase your taxable income by $22,200?

$7,708

Teddy's Pillows had beginning net fixed assets of $459 and ending net fixed assets of $526. Assets valued at $307 were sold during the year. Depreciation was $18. What is the amount of net capital spending?

$85