Finance Midterm Ch 2 questions

Gupta Gourmet has a current market value of $26,400 and owes its creditors $31,300. What is the market value of the shareholders' equity?

$0

Bianchi Crafts has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?

$1,732

Pavlak Surveyors has beginning current assets of $1,360, beginning current liabilities of $940, ending current assets of $1,720, and ending current liabilities of $1,080. What is the change in net working capital?

$220

Ryu and Fowler Attorneys has total assets of $4,900, fixed assets of $3,200, long-term debt of $2,900, and short-term debt of $1,400. What is the amount of net working capital?

$300

Krauss Upholstery purchased all of its fixed assets three years ago for $4 million. These assets can be sold today for $2 million. The current balance sheet shows net fixed assets of $2,500,000, current liabilities of $1,375,000, and net working capital of $725,000. If all the current assets were liquidated today, the company would receive $1.9 million in cash. The book value of the total assets today is ________ and the market value of those assets is ________.

$4,600,000; $3,900,000

Callender Bikes has sales of $705,000, costs of $156,000, depreciation expense of $22,200, interest expense of $1,970, and an average tax rate of 21 percent. How much operating cash flow did the firm generate?

$438,786

Mikeska Equipment Repair has net working capital of $560. Long-term debt is $3,970, total assets are $7,390, and fixed assets are $3,910. What is the amount of the total liabilities?

$6,890

The balance sheet of Perez Printing shows $680 in inventory, $2,140 in fixed assets, $210 in accounts receivables, $250 in accounts payable, and $80 in cash. How much net working capital does the company have?

$720

Clark-Phillips Incorporated purchased $145,000 in new equipment and sold equipment with a net book value of $68,400 during the year. What is the amount of net capital spending if the depreciation was $38,600?

$76,600

Kalagara Outfitters neither sold nor repurchased any shares of stock during the year. The firm had annual sales of $7,202, depreciation of $1,196, cost of goods sold of $4,509, interest expense of $318, taxes of $248, beginning-of-year shareholders' equity of $4,808, and end-of-year shareholders' equity of $4,922. What is the amount of dividends paid during the year?

$817

Arora Jewelry owns the building in which it conducts business. The building cost $647,000 to purchase and is currently appraised at $819,000. The fixtures inside the building originally cost $148,000 and are currently valued at $65,000. The inventory has a book value of $319,000 and a market value equal to 1.1 times the book value. The shop expects to collect 96 percent of its $21,700 in accounts receivable. The shop has $26,800 in cash and total debt of $414,700. What is the market value of its equity?

$867,832

The Somerville Corporation has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent?

$906.33

Based on the tax table below, what is the average tax rate for a sole proprietor with taxable income of $155,000? Ignore any standard or itemized deductions. Taxable Income Tax Rate$ 0 − 9,875 10% 9,875 − 40,125 12 40,125 − 85,525 22 85,525 − 163,300 24

20.18%

Which one of the following statements related to the cash flow to creditors must be correct?

A positive cash flow to creditors represents a net cash outflow from the firm.

Which of the following actions could cause a company's change in net working capital to be negative for a given year?

Borrow money from the bank using a note payable in nine months

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

Income statement

Assuming accrual accounting is employed, which one of the following statements is correct?

The costs of acquiring a product are expensed when the product is sold.

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.

The cash flow that is available for distribution to a corporation's creditors and stockholders is called the:

cash flow from assets.

Cash flow to stockholders is defined as:

dividend payments less net new equity raised.