FNAN 300 Chapter 2 connect

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920. The depreciation expense for the year is $46,080 and the interest expense is $11,460. What is the amount of the net capital spending?

$69,800

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

operating cash flow, capital spending, change in net working capital

Physical assets are termed ____________ assets.

tangible

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

pay operating costs.

On a balance sheet, total assets must always equal total liabilities plus:

shareholders' equity

Suzette'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?

$105,800

Wes Motors has total assets of $98,300, net working capital of $11,300, owners' equity of $41,600, and long-term debt of $38,600. What is the value of the current assets?

$29,400

Andersen's Nursery has sales of $318,400, costs of $199,400, depreciation expense of $28,600, interest expense of $1,100, and a tax rate of 35 percent. The firm paid out $23,400 in dividends. What is the addition to retained earnings?

$34,645

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?

$71,600

Marcie's has sales of $179,600,depreciation of $14,900, costs of goods sold of $138,200, and other costs of $28,400. The tax rate is 35 percent. What is the net income?

-$1,235

Rank the ease (from easiest to hardest) of turning the following assets into cash.

1. Cash equivalents 2.accounts receivable 3. Inventory 4. plant and equipment

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

12

Neiger Flours owes $16,929 in taxes on taxable income of $61,509. If the firm earns $100 more in income, it will owe an additional $48 in taxes. What is the average tax rate on income of $61,609?

27.56 percent

A customer has yet to pay the bill for products purchased from Firm A on credit. This customer's trade credit is recorded in which of Firm A's balance sheet accounts?

Accounts Receivable

What is the balance sheet equation?

Assets equal liabilities plus stockholders' equity

What does GAAP stand for?

Generally accepted accounting principles

Who is entitled to the residual value of a firm's cash flows?

Shareholders

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

True

True or false: Free cash flow is very similar to cash flow from assets.

True

A balance sheet reflects a firm's

accounting value on a specific date.

Net working capital will be negative when current assets _____ current liabilities.

are less than

Liquidity refers to the ease of changing__________.

assets to cash

________is an intangible fixed asset

copyright

Assets can be categorized as

current and fixed assets tangible and intangible assets

Net working capital equals __________.

current assets minus current liabilities.

The more debt a firm has, the greater its:

degree of financial leverage

Net capital spending is equal to the change in new fixed assets plus:

depreciation

Under GAAP, assets are generally carried on a firm's balance sheet at _______.

historical cost, and book value

Cash flow to creditors equals

interest paid minus net new borrowing

The prize at which willing buyers and sellers would trade is called _____value.

market

The balance sheet identity shows that stockholders' equity equals assets _______liabilitities

minus

Shareholders' equity is best defined as

the residual value of a firm

Free cash flow is better described as _______.

total distributable cash flow