Finance Chapter 1-3

Dockside Warehouse has net working capital of $42,400, total assets of $519,300, and net fixed assets of $380,200. What is the value of the current liabilities?

519300 - 42400 = 476900 476900 - 380200 = 96700

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

Assets are listed in descending order of liquidity.

Which ratio was primarily designed to monitor firms with negative earnings?

Price-sales ratio

Given a profitable firm, depreciation:

lowers taxes.

The sustainable growth rate is based on the premise that:

the debt-equity ratio will be held constant.

Net working capital is defined as:

current assets minus current liabilities.

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

income statement.

A firm has net working capital of $6,800 and current assets of $21,800. What is the current ratio?

21800 - 6800 = 15000 21800 / 15000 = 1.45

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?

34700 + 29800 = 64500 64500 + 64800 = 129300 129300 - 34700 - 23000 = 71600

ANC Plastics has net working capital of $15,400, current assets of $39,200, equity of $46,600, and long-term debt of $22,100. What is the amount of the net fixed assets?

39200 - 15400 = 23800 23800 + 22100 + 46600 = 92500 92500 - 39200 = 53,300**

Leisure Products has sales of $738,800, cost of goods sold of $598,200, and accounts receivable of $86,700. How long on average does it take the firm's customers to pay for their purchases? Assume a 365-day year.

738800 / 86700 = 8.52 365/8.52 = 42.83

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

marginal tax rate.

Shareholders' equity is equal to:

net fixed assets minus long-term debt plus net working capital.

The equity multiplier is equal to:

one plus the debt-equity ratio.

Holly Farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400. The tax rate is 28 percent. How much net income did the firm earn for the period?

509600 448150 36100 --------- 25350 12400 ---------- 12950 3626 (12950 x .28) --------- 9324

UXZ has sales of $683,200, cost of goods sold of $512,900, and inventory of $74,315. What is the inventory turnover rate?

512900 / 74315 = 6.90

Cornerstone Markets 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?

64500 + 11000 + 4100 = 79600 79600 - 16300 = 63300

Plenti-Good Foods has ending net fixed assets of $98,700 and beginning net fixed assets of $84,900. During the year, the firm sold assets with a total book value of $13,200 and also recorded $9,800 in depreciation expense. How much did the company spend to buy new fixed assets?

98700 - 84900 = 13800 13800 + 9800 = 23600 23600 + 13200 = 36,800**

Which one of the following statements is correct?

Adjustments have to be made when comparing the income statements of firms that use different methods of accounting for inventory.

The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions?

No new external equity and a constant debt-equity ratio

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?

Positive cash flow to stockholders

Production equipment is classified as:

a tangible fixed asset.

Financial statement analysis:

provides useful information that can serve as a basis for forecasting future performance.

A negative cash flow to stockholders indicates a firm:

received more from selling stock than it paid out to shareholders.

Net income increases when:

revenue increases.

Common-size financial statements present all balance sheet account values as a percentage of:

total assets.