Business Finance Exam 2

Net earnings refers to income earned ______.

After interest and taxes

True or false: With the passage of the Tax Cuts and Jobs Act of 2017, corporate tax rates went up. T/F

False

Which of these questions can be answered by reviewing a firm's balance sheet?

How much debt is used to finance the firm? What is the total amount of assets the firm owns?

The ______ tax rate is the tax rate paid on the next dollar of income.

Marginal

The price at which willing buyers and sellers would trade is called ______ value.

Market

The balance sheet identity shows that stockholders' equity equals assets ______ liabilities.

Minus

Liquidity has two dimensions which are the ability to:

Quickly convert assets into cash without significant loss in value.

Cash flow refers to _____.

the difference between the number of dollars that came in and the number that went out

Long-term liabilities are not due in the current year (from the date of the balance sheet). T/F

True

______ changes as the output of the firm changes.

Variable Cost

Which of the following are classified as fixed assets on the balance sheet?

Buildings, Equipment & Trademark

The more debt a firm has, the greater its:

Degree of financial leverage

Which of the following is an example of a non-cash item on an income statement?

Depreciation