Ch.2 Principles of Finance

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

Current assets are defined as assets that can be turned into cash within Blank______ months.

12

In the long run, costs may be considered as Blank______.

all variable

The short run is a period when there are Blank______ costs. Multiple choice question.

both fixed and variable

Noncash items do not affect Blank______.

cash flow

In finance, the value of a firm depends on its ability to generate Blank______.

cash flows

When a firm smooths earnings to please investors, it is called Blank______.

earnings management

Period costs are the costs that are allocated to a specific Blank______.

interval of time

Interest paid ________ (plus/minus) net new borrowing equals cash flow to creditors.

minus

The cash flow that results from the firm's day-to-day activities of producing and selling is called:

operating cash flow.

Earnings management is a controversial practice in which corporations Blank______ or Blank______ their earnings to "smooth out" dips and surges and keep investors calm.

overstate, understate

How is the average income tax rate computed?

total tax bill / total taxable income

According to GAAP, when is income reported?

when it is earned or accrued

Long-term liabilities represent obligations of the firm lasting more than Blank______.

1 year

The more debt a firm has, the greater its:

financial leverage

Which of the following is not a component of cash flow from assets? Multiple choice question.

financing expenses

Cash flow to creditors equals: Multiple choice question.

interest paid minus net new borrowing.

Current assets (plus/minus) current liabilities equals NWC.

minus

True or false: Operating cash flow does not include depreciation or interest.

true

Financial leverage refers to a firm's Blank______.

use of debt in its capital structure

According to GAAP, when is revenue recognized on an income statement?

when the earnings process is virtually completed when the value of an exchange of goods or services is known or reliably determined

Cash flow to stockholders equals Blank______.

dividends paid minus net new equity raised

According to the current U.S. corporate tax code, the corporate tax rate in effect for 2021 is Blank______ percent.

21

Which of the following is the balance sheet equation?

Assets equal liabilities plus stockholders' equity.

Product costs are usually shown on the income statement under the heading of Blank______.

COGS

Assets can be categorized as:

current and fixed assets tangible and intangible assets

______ changes as the output of the firm changes.

Variable cost

The last item (or "bottom line") on the income statement is typically the Blank______.

Net income

Which one of these is considered to be the most liquid?

accounts receivable

Net income refers to income earned Blank______.

after interest and taxes

Liquidity refers to the ease of changing Blank______.

assets to cash

A company's Blank______ tax rate is its tax bill divided by its total taxable income, and its Blank______ tax rate is the tax rate it pays on the next dollar of income.

average; marginal

Which of the following are components of cash flow from assets?

change in net working capital capital spending operating cash flow

Tax rates for proprietorships, partnerships, and LLCs Blank______ with the passage of the Tax Cuts and Jobs Act of 2017.

changed

A positive operating cash flow indicates that the firm is generating enough cash to:

pay everyday cash outflows.

Ending net fixed assets minus beginning net fixed assets _________ depreciation equals net investment in fixed assets.

plus

Net capital spending is equal to ending net fixed assets minus beginning net fixed assets Blank______.

plus depreciation

Liquidity has two dimensions which are the ability to:

quickly convert assets into cash without significant loss in value.

The more debt a firm has, the greater its:

degree of financial leverage.

Net capital spending is equal to the change in net fixed assets plus Blank______.

depreciation

Which of the following is an example of a noncash item on an income statement?

depreciation

True or false: Current assets plus current liabilities equals net working capital.

false

True or false: Ending net fixed assets plus beginning net fixed assets minus depreciation equals net investment in fixed assets.

false

Costs that do not change in the short run arise because of Blank______.

fixed commitments

The balance sheet identity shows that stockholders' equity equals assets Blank______ liabilities.

minus

Stockholders' equity is always shown on the Blank______ of the balance sheet.

right-hand side

Physical assets are termed Blank______ assets.

tangible

Operating cash flow _________.

tells us whether or not a firm's cash inflows from its operations are sufficient to cover its everyday cash outflows is a sign of trouble if negative over a long period of time

Changes in capital spending can be negative if:

the firm sold more fixed assets than it purchased.

On which side of the balance sheet do liabilities appear?

the right-hand side

Free cash flow is better described as Blank______.

total distributable cash flow

Which of the following are classified as fixed assets on the balance sheet?

trademark buildings equipment

True or false: Free cash flow is also known as cash flow from assets. True false question.

true

True or false: Interest paid minus net new borrowing equals cash flow to creditors.

true


Kaugnay na mga set ng pag-aaral

Micro 261 Chapter 28 Microbiology Place

View Set

What is lifestyle medicine? Managing your health care

View Set

Reference Angles, Coterminal angles, Standard Position, Coterminal and Reference Angles

View Set

Module 9: Monitoring for Health Problems

View Set

Bsn 395 compass Hesi mid study plan A————NU373 Week 3 EAQ Evolve Elsevier: Oxygenation (Asthma, COPD, RSV)

View Set

Honors persuassion exam 1 psy 4390

View Set