chapter 2 quiz 2

beginning in 2018, the corporate tax rate is _____ percent, and that rate applies regardless of the level of taxable income

21

OCF formula

EBIT + depreciation - taxes

the cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

cash flow from assets

a firm's interest payments to creditors less net new borrowing

cash flow to creditors

dividends paid out by a firm less net new equity raised

cash flow to stockholders

an increase in the depreciation expense will do which of the following?

decrease net income increase the cash flow from assets

the _____ industry paid the highest average tax rate and the _____ industry paid the lowest average tax rate

electric utilities biotech

average tax rate

equals the total taxes paid divided by total taxable income

with a _____ tax, there is only one tax rate, so the rate is the same for all income levels

flat rate

net capital spending

is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense

marginal tax rate

is the percentage of the next dollar you earn that must be paid in taxes

cash flow from assets (fcf) involves three components:

operating cash flow capital spending change in net working capital

which one of the following must be true if a firm had a negative cash flow from assets?

the firm utilized outside funding (i.e., raised new debt and equity)

(t/f) a primary reason for the 2017 tax cuts was to eliminate the incentive for tax inversions and other strategies to avoid the US corporate tax

true