Principles of Finance CH2

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Cardinal Industries had the following operating results for 2018: Sales = $35,025; Cost of goods sold = $24,555; Depreciation expense = $6,067; Interest expense = $2,745; Dividends paid = $2,059. At the beginning of the year, net fixed assets were $20,010, current assets were $7,103, and current liabilities were $4,034. At the end of the year, net fixed assets were $24,565, current assets were $8,726, and current liabilities were $4,736. The tax rate for 2018 was 24 percent. If no new debt was issued during the year, what is the cash flow to creditors?

$21,792

Pompeii, Inc., has sales of $50,500, costs of $23,200, depreciation expense of $2,300, and interest expense of $2,050. If the tax rate is 24 percent, what is the operating cash flow, or OCF?

B) The tax for a company is computed by multiplying the marginal tax rate times the taxable income.

Under the current U.S corporate tax code, which of the following statements is correct? A) A corporation's marginal tax rate is equal to its average tax rate. B) The tax for a company is computed by multiplying the marginal tax rate times the taxable income. C) Additional income is taxed at a firm's average tax rate. D) The marginal tax rate will always exceed a company's average tax rate. E) The marginal tax rate for a company can be either higher than or equal to the average tax rate.

A) If the cash flow to creditors is positive, then the firm must have borrowed more money than it repaid.

Which one of the following statements related to the cash flow to creditors must be correct? A) If the cash flow to creditors is positive, then the firm must have borrowed more money than it repaid. B) If the cash flow to creditors is negative, then the firm must have a negative cash flow from assets. C) A positive cash flow to creditors represents a net cash outflow from the firm. D) A positive cash flow to creditors means that a firm has increased its long-term debt. E) If the cash flow to creditors is zero, then a firm has no long-term debt.

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Cardinal Industries had the following operating results for 2018: Sales = $35,025; Cost of goods sold = $24,555; Depreciation expense = $6,067; Interest expense = $2,745; Dividends paid = $2,059. At the beginning of the year, net fixed assets were $20,010, current assets were $7,103, and current liabilities were $4,034. At the end of the year, net fixed assets were $24,565, current assets were $8,726, and current liabilities were $4,736. The tax rate for 2018 was 24 percent. If no new debt was issued during the year, what is the cash flow to stockholders?

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Cardinal Industries had the following operating results for 2018: Sales = $35,025; Cost of goods sold = $24,555; Depreciation expense = $6,067; Interest expense = $2,745; Dividends paid = $2,059. At the beginning of the year, net fixed assets were $20,010, current assets were $7,103, and current liabilities were $4,034. At the end of the year, net fixed assets were $24,565, current assets were $8,726, and current liabilities were $4,736. The tax rate for 2018 was 24 percent. What is the cash flow from assets for 2018?

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Cardinal Industries had the following operating results for 2018: Sales = $35,025; Cost of goods sold = $24,555; Depreciation expense = $6,067; Interest expense = $2,745; Dividends paid = $2,059. At the beginning of the year, net fixed assets were $20,010, current assets were $7,103, and current liabilities were $4,034. At the end of the year, net fixed assets were $24,565, current assets were $8,726, and current liabilities were $4,736. The tax rate for 2018 was 24 percent. What is the net income for 2018?

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Cardinal Industries had the following operating results for 2018: Sales = $35,025; Cost of goods sold = $24,555; Depreciation expense = $6,067; Interest expense = $2,745; Dividends paid = $2,059. At the beginning of the year, net fixed assets were $20,010, current assets were $7,103, and current liabilities were $4,034. At the end of the year, net fixed assets were $24,565, current assets were $8,726, and current liabilities were $4,736. The tax rate for 2018 was 24 percent. What is the operating cash flow for 2018?

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During the past year, a company had cash flow to creditors, an operating cash flow, and net capital spending of $29,348, $65,239, and $26,720, respectively. The net working capital at the beginning of the year was $11,395 and it was $13,000 at the end of the year. What was the company's cash flow to stockholders during the year? A) $1,605 B) $9,171 C) $5,820 D) $10,776 E) $7,566

D) Expenses that do not directly affect cash flows.

Noncash items refer to: A) Fixed expenses. B) Inventory items purchased using credit. C) The ownership of intangible assets such as patents. D) Expenses that do not directly affect cash flows. E) Sales that are made using store credit.

$25,000

The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $2.9 million, and the 2018 balance sheet showed long-term debt of $3.1 million. The 2018 income statement showed an interest expense of $145,000. During 2018, the company had a cash flow to creditors of -$55,000 and the cash flow to stockholders for the year was $80,000. Suppose you also know that the firm's net capital spending for 2018 was $1,330,000, and that the firm reduced its net working capital investment by $61,000. What was the firm's 2018 operating cash flow, or OCF?

C) Balance sheet

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date? A) Income Statement B) Creditor's statement C) Balance sheet D) Statement of cash flows E) Dividend statement

D) Taxes reduce both net income and operating cash flow.

Which one of the following statements related to an income statement is correct? A) Interest expense increases the amount of tax due. B) Depreciation does not affect taxes since it is a non-cash expense. C) Net income is distributed to dividends and paid-in surplus. D) Taxes reduce both net income and operating cash flow. E) Interest expense is included in operating cash flow.