FIN 3000 Chapter 2 Homework

which one of the following accounts is the most liquid?

accounts receivable

the book value of a firm is

based on historical transactions

A _________ __________ is one that has a life of less than one year, meaning they must be paid within the year

current liability

which one of the following financial statements summarizes a firm's revenue and expenses during a period of time?

income statement

the first thing reported on an income statement would usually be:

revenues

which one of the following statements concerning corporate income taxes is correct?

the federal income tax is applied at a flat rate across all levels of taxable income

which one of the following is classified as a tangible fixed asset?

computer equipment

Nataro, Incorporated, has sales of $674,000, costs of $336,000, depreciation expense of $80,000, interest expense of $50,000, and a tax rate of 22 percent. What is the net income for this firm?

(674,000-336,000-80,000-50,000)*(1-.22)= $162,240

from the income statement, the corporation had a net income of $724 million for the year. Total dividends were $106 million. There were 400 million shares outstanding. How much is the dividends per share?

106 mil/400 mil= $0.265

a company has net working capital of $2,050. If all its current assets were liquidated, the company would receive $5,975. What are the company's current liabilities?

5,975-2,050= $3925

Logano Driving School's 2017 balance sheet showed net fixed assets of $3.6 million, and the 2018 balance sheet showed net fixed assets of $5.5 million. The company's 2018 income statement showed a depreciation expense of $925,000. What was net capital spending for 2018?

5.5 mil-3.6 mil+0.925 mil 5,500,000-3,600,000+925,000= $2,825,000

Nataro, Incorporated, has sales of $742,000, costs of $316,000, depreciation expense of $39,000, interest expense of $34,000, a tax rate of 21 percent, and paid out $125,000 in cash dividends. The common stock outstanding is 75,000 shares. a. What is the earnings per share, or EPS, figure? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the dividends per share figure? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

a. net income/total shares outstanding net income = ((742,000-316,000-39,000-34,000)-((742,000-316,000-39,000-34,000)(0.21)))/75,000 278870/7500 = 3.72 b. total dividends/total shares outstanding 125,000/75,000 = 1.67

the Balance Sheet Identity is:

assets = liabilities + owner's equity

for a firm that must pay income taxes, depreciation expense:

increases expenses and lowers taxes

which one of the following is classified as a current asset?

inventory

shareholders equity

is referred to as a firm's financial leverage

as the degree of financial leverage increases, the

probability a firm will encounter financial distress increases

Disturbed, Incorporated, had the following operating results for the past year: sales = $22,545; depreciation = $1,320; interest expense = $1,064; costs = $16,495. The tax rate for the year was 21 percent. What was the company's operating cash flow?

taxes=(sales-cost-depreciation-interest)(rate) taxes=(22545-16495-1320-1064)(.21)=769.86 OCF=sales-cost-taxes OCF=22545-16495-769.86= $5280

earnings per share can be calculated as Net Income/Total shares outstanding

true

The balance sheet of XYZ Company is shown below. What is the Net Working Capital for the company? ASSETS Current assets $ 300 Net fixed assets $ 1,500 Total assets $ 1,800 LIABILITIES & OWNERS' EQUITY Current liabilities $ 240 Long-term debt $ 700 Owners' equity $ 860 Total liabilities and equity $ 1,800

current assets - current liabilities = NWC 300-240= $60

from the income statement, the corporation had a net income of $724 million for the year. Total dividends were $106 million. There were 400 million shares outstanding. How much is the earnings per share?

724 mil/400mil= $1.81

Bing, Incorporated, has current assets of $7,000, net fixed assets of $25,900, current liabilities of $5,450, and long-term debt of $13,000. a. What is the value of the shareholders' equity account for this firm? (Do not round intermediate calculations.) b. How much is net working capital? (Do not round intermediate calculations.)

a. current assets+net fixed assets=current liabilities+long term debt+net working capital 7000+25900=5450+13000+(owners equity) owners equity= $14,450 b. current assets-current liabilities 7000-5450= $1550

which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

balance sheet

The balance sheet for the Capella Corporation is as follows: ASSETS Current assets $ 300 Net fixed assets $ 1,200 Total assets $ 1,500 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities $ 110 Long-term debt $ 500 Shareholders' equity $ 890 Total liabilities and shareholders' equity $ 1,500 What is the Net Working Capital for Capella Corporation?

current assets - current liabilities 300-110= $190

Net working capital represents current assets plus current liabilities

false

Villacana Lighting has beginning total debt of $682,400 and ending total debt of $697,413. Current liabilities increased by $18,915 during the year. What was the cash flow to creditors if the firm paid $34,215 in interest during the year?

interest-change in debt 34,215-(697,412-682,400) = $19,202