Bus Fin chapter 2

National Importers paid $38,600 in dividends and $24,615 in interest over the past year while net working capital increased from $15,506 to $17,411. The company purchased $38,700 in net new fixed assets and had depreciation expenses of $14,784. During the year, the firm issued $20,000 in net new equity and paid off $23,800 in long-term debt. What is the amount of the cash flow from assets?

$67,015

The financial statements of Blue Fin Marina reflect depreciation expenses of $41,600 and interest expenses of $27,900 for the year. The current assets increased by $31,800 and the net fixed assets increased by $28,600. What is the amount of the net capital spending for the year?

$70,200

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

During the past year, Yard Services paid $36,800 in interest along with $2,000 in dividends. The company issued $3,000 of stock and $16,000 of new debt. The company reduced the balance due on its old debt by $18,400. What is the amount of the cash flow to creditors?

39,200

The Carpentry Shop has sales of $398,600, costs of $254,800, depreciation expense of $26,400, interest expense of $1,600, and a tax rate of 34 percent. What is the net income for this firm?

76,428

Dockside Warehouse has net working capital of $42,400, total assets of $519,300, and net fixed assets of $380,200. What is the value of the current liabilities?

96,700

Which one of the following statements concerning the balance sheet is correct?

Assets are listed in descending order of liquidity.

Based on the recognition principle, revenue is recorded on the financial statements when the: I. payment is collected for the sale of a good or service. II. earnings process is virtually complete. III. value of a sale can be reliably determined. IV. product is physically delivered to the buyer.

II and III only

The concept of marginal taxation is best exemplified by which one of the followin

Mitchell's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.

Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend. The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Positive cash flow to stockholders

Production equipment is classified as:

a tangible fixed asset

Net working capital includes:

an invoice from a supplier.

Which one of the following terms is defined as the total tax paid divided by the total taxable income?

average tax rate

Highly liquid assets:

can be sold quickly at close to full value.

Which one of the following has nearly the same meaning as free cash flow?

cash flow from assets

Net capital spending is equal to:

ending net fixed assets minus beginning net fixed assets plus depreciation.

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital:

had to decrease

A firm?s liquidity level decreases when:

inventory is purchased with cash.

Net working capital increases when:

inventory is sold at a profit

The market value of a firm's fixed assets:

is equal to the estimated current cash value of those assets

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

marginal tax rate

Shareholders' equity is equal to:

net fixed assets minus long-term debt plus net working capital.

the market value

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

Net income increases when:

revenue increases

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

$10,400

Rusty Antiques has a marginal tax rate of 39percent and an average tax rate of 26.9 percent. If the firm owes $37,265 in taxes, how much taxable income did it earn?

$138,532

Last year, The Pizza Joint 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 34 percent, what was the amount of the depreciation expense?

$2,503

The Embroidery Shoppe had beginning retained earnings of $18,670. During the year, the company reported sales of $83,490, costs of $68,407, depreciation of $8,200, dividends of $950, and interest paid of $478. The tax rate is 34 percent. What is the retained earnings balance at the end of the year?

$21,947.30

Cash flow to creditors increases when:

long-term debt is repaid.

Given a profitable firm, depreciation:

lowers taxes

Plenti-Good Foods 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?

$36,800

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent?

93,560

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.4 million. The machinery can be sold to the Romulans today for $6.6 million. Klingon's current balance sheet shows net fixed assets of $3.2 million, current liabilities of $750,000, and net working capital of $134,000. If all the current accounts were liquidated today, the company would receive $865,000 cash. What is the book value of Klingon's total assets today? Book value of total assets $ What is the sum of the market value of NWC and market value of fixed assets? Sum $

Current Assets = Current Liabilities + Working Capital Current Assets = 750,000 + 134,000 = $884,000 Book value of Total Assets = Current Assets book value + Net fixed assets Book value of Total Assets = 884,000 + 3,200,000 = $4,084,000 Total Assets Market Value = 865,000 + 6,600,000 = $7,465,000

Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period?

positive cash flow from assets

A negative cash flow to stockholders indicates a firm:

received more from selling stock than it paid out to shareholders.

market value

reflect expected selling prices given the current economic situation

The recognition principle states that:

sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined.