Finance chapter 1+2

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller?

Cash Managment

Which one of the following occupations best fits into the corporate area of finance?

Chief Financial officer

If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas?

Investments

All over the counter sales occur in

dealer markets

Cash flow from assets is defined as:

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

Market Values:

reflect expected selling prices given the current economic situation.

Pacheo's Market had long-term debt of $638,100 at the beginning of the year compared to $574,600 at year-end. If the interest expense was $42,300, what was the firm's cash flow to creditors?

$42,300- ($574,600-638,100) =$105,800

Last year, Northside Pizza added $6,230 to retained earnings from sales of $104,650. The company had costs of $87,300, dividends of $2,500, and interest paid of $1,620. Given a tax rate of 21 percent, what was the amount of the depreciation expense?

4679

For the year, Bethalto Furniture had sales of $818,790, costs of $748,330, and interest paid of $24,450. The depreciation expense was $56,100 and the tax rate was 21 percent. At the beginning of the year, the firm had retained earnings of $172,270 and common stock of $260,000. At the end of the year, retained earnings was $158,713 and common stock was $280,000. Any tax losses can be used. What is the amount of the dividends paid for the year?

5586

Preston Financial 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+9800+13200-84900=36800

Limited liability companies are primarily designed to:

Provide Limited Liability while avoiding double taxation

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Agency

Which one of the following is a working capital decision?

How mucg cash should the firm keep in reserve

NASDAQ has...

More listed stock that NYSE

For the year, Bethalto Furniture had sales of $818,790, costs of $748,330, and interest paid of $24,450. The depreciation expense was $56,100 and the tax rate was 21 percent. At the beginning of the year, the firm had retained earnings of $172,270 and common stock of $260,000. At the end of the year, retained earnings was $158,713 and common stock was $280,000. Any tax losses can be used. What is the amount of the dividends paid for the year?

Net income = [($818,790 -748,330-56,100 -24,450)(1 -.34)] =-$6,659 Dividends paid = -$6,659 - ($158,713-172,270) = $6,898

Assume a company has sales of $423,800, production costs of $297,400, other expenses of $18,500, depreciation expense of $36,300, interest expense of $2,100, taxes of $23,600, and dividends of $12,000. In addition, you're told that during the year the firm issued $4,500 in new equity 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?

OCF = $423,800 -297,400 -18,500 -23,600 = $84,300 NCS = $7,400 + 36,300 = $43,700 CFA = CFC + CFS = [$2,100 - (-6,500)] + [$12,000 -4,500] = $16,100 Add to NWC = OCF - NCS - CFA = $84,300 -43,700 -16,100 = $24,500

The market value of:

an asset tends to provide a better guide to the actual worth of that asset than does the book value.

Cash flow to creditors is defined as:

interest paid minus net new borrowing

A corporation:

is a legal entity seperate from its owners

An employee has a claim on the cash flows of Westlake Machines. This claim is defined as a claim by one of the firm's:

stakeholders

Operating cash flow is defined as:

the cash that a firm generates from its normal business activities.

Firms that compile financial statements according to GAAP:

Can still manipulate their earnings to some degree.