Managerial Finance 3220 Quiz 1

10. The Lakeside Inn had operating cash flow of $48,450. Interest paid was $2,480. A net total of $2,620 was paid on reducing long-term debt. The firm spent $24,000 on capital spending and decreased net working capital by $1,330. What is the amount of the cash flow to stockholders? A. $20,680 B. $5,100 C. $7,830 D. $18,020 E. $19,998

A. $20,680 Cash flow from assets = $48,450 - (-$1,330) - $24,000 = $25,780Cash flow to creditors =$2,480 - (-$2,620) = $5,100Cash flow from assets = Cash flow to creditors + Cash flow to stockholders Cash flow to stockholders = $25,780 - $5,100 = $20,680

6. A firm has $520 in inventory, $1,860 in fixed assets, $190 in accounts receivables, $210 in accounts payable, and $70 in cash. What is the amount of the current assets? A. $710 B. $780 C. $990 D. $2,430 E. $2,640

B. $780 Solution: Current Assets = 520 + 190 + 70 = 780

Given the tax rates as shown, Answer the next two questions for a firm with taxable income of $311,360? 7. What is the average tax rate? A. 28.25 percent B. 31.09 percent C. 33.62 percent D. 35.48 percent E. 39.00 percent

C. 33.62 percent Tax Liability = .15($50,000) + .25($25,000) + .34($25,000) + .39($211,360) = $104,680.40 Average tax rate = $104,680.40/$311,360 = 33.62 percent

4. Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers? A. articles of incorporation B. corporate breakdown C. agency problem D. bylaws E. legal liability

C. agency problem

Which of the following terms is defined as the management of a firm's long-term investment? A. working capital Management B. financial allocation C. agency cost analysis D. capital budgeting E. capital structure

D. Capital Budgeting

5. Which of the following accounts are included in working capital management? I. accounts payable II. accounts receivable III. fixed assets IV. inventory A. I and II only B. I and III only C. II and IV only D. I, II, and IV only E. II, III, and IV only

D. I, II, and IV only

8. What is the marginal tax rate? A. 28.25 percent B. 31.09 percent C. 33.62 percent D. 35.48 percent E. 39.00 percent

E. 39.00 percent

3. What should be the goal of a corporation? A. Maximize profitB. Minimize costs C. Maximize market share D. Maximize management corporation E. Maximize the current value of the company's stock

E. Maximize the current value of the company's stock

Which one of the following terms is defined as the mixture of a firm's debt and equity financing? A. working capital management B. cash management C. cost analysis D. capital budgeting E. capital structure

E. capital structure

9. Net working capital is defined as: A. total liabilities minus shareholders' equity. B. current liabilities minus shareholders' equity. C. fixed assets minus long-term liabilities. D. total assets minus total liabilities. E. current assets minus current liabilities.

E. current assets minus current liabilities.