Finance Chapter 2 Quiz
At the beginning of the year, a firm has current assets of $313 and current liabilities of $217. At the end of the year, the current assets are $463 and the current liabilities are $257. What is the change in net working capital?
$110 463-257 = 206 313-217 = 96 206 - 96 = 110
Ivan's, Inc., paid $462 in dividends and $576 in interest this past year. Common stock increased by $186 and retained earnings decreased by $112. What is the net income for the year?
$350 462-112=350
A company is obligated to pay its creditors $6,325 at the end of the year. If the value of the company's assets equals $6,115 at that time, what is the value of shareholders' equity?
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For the past year, Momsen, Ltd., had sales of $47,552, interest expense of $4,322, cost of goods sold of $17,709, selling and administrative expense of $12,336, and depreciation of $7,285. If the tax rate was 40 percent, what was the company's net income?
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Thornton, Inc., had taxable income of $130,022 for the year. The company's marginal tax rate was 34 percent and its average tax rate was 23.5 percent. How much did the company have to pay in taxes for the year?
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For the past year, Kayla, Inc., has sales of $43,847, interest expense of $2,840, cost of goods sold of $14,384, selling and administrative expense of $10,531, and depreciation of $4,530. If the tax rate is 38 percent, what is the operating cash flow?
$14,538 EBIT = 43,847 - 14,384 - 10,531 - 4,530 = $14,402 EBT = 14,402 - 2,840 = 11,562 Taxes = 11,562 x .38 = 4,394 OCF = 14,402 + 4,530 - 4,394 = 14,538
Hoodoo Voodoo Co. has total assets of $64,200, net working capital of $19,300, owners' equity of $31,500, and long-term debt of $21,800. What is the company's current assets?
$30,200 64,200 - 31,500 - 21,800 = 10,900 10,900 + 19,300 = 30,200
You find the following financial information about a company: net working capital = $1,314; fixed assets = $7,873; total assets = $11,974; and long-term debt = $4,615. What is the company's total equity?
$4,572 Current assets = $11,974 − 7,873 = $4,101 $4,101 - $1,314 = CL CL = $2,787 Total equity = $11,974 − 4,615 − 2,787 = $4,572
Which one of the following is a current liability? -Note payable to a supplier in 13 months -Amount due from a customer that is past due -Amount due from a customer in two weeks -Loan payable to the bank in 18 months -Account payable to a supplier that is due next week
Account payable to a supplier that is due next week
Which one of the following is a current asset? Trademark Accounts Payable Equipment Notes Payable Accounts Receivable
Accounts Receivable
The _____ tax rate is equal to total taxes divided by total taxable income.
Average
Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?
Balance Sheet
Which one of the following statements concerning net working capital is correct? -Net working capital increases when inventory is sold for cash at a profit. -An increase in net working capital must also increase current assets. -A firm's ability to meet its current obligations increases as the firm's net working capital decreases. -Net working capital is a part of the operating cash flow. -Firms with equal amounts of net working capital are also equally liquid.
Net working capital increases when inventory is sold for cash at a profit.
Which term relates to the cash flow that results from a company's ongoing, normal business activities?
Operating Cash Flow
Which one of the following will decrease the value of a firm's net working capital? -Selling inventory at a loss -Collecting an accounts receivable -Using cash to pay a supplier -Purchasing inventory on credit -Depreciating an asset
Selling inventory at a loss