Ch. 2 Finance

Cash flow to stockholders is defined as:

Dividends paid less net new equity raised

The common set of standards and procedures by which audited financial statements are prepared is known as the:

Generally Accepted Accounting Procedures

Which of the following are included in current liabilities?

I. note payable to a supplier in eight months III. account payable to a supplier that is due next week

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Income statement

current assets minus current liabilities.

Net working capital is defined as:

A positive cash flow to stockholders indicates which one of the following with certainty?

The dividends paid exceeded the net new equity raised.

Which one of the following statements related to taxes is correct?

The marginal tax rate for a firm can be either higher than or the same as the average tax rate.

Which of the following is the most liquid?

accounts receivable

The cash flow related to interest payments less any net new borrowing is called the:

cash flow to creditors

The higher the degree of financial leverage employed by a firm, the:

higher the probability that the firm will encounter financial distress.

Assets are listed on the balance in order of decreasing

liquidity. Inventory is least liquid. Fixed assets not liquid.

The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.

marginal

Fixed assets can be

tangible (truck) or intangible (patent)