FIN Ch. 2 Learnsmart

free cash flow is better described as

fixed asset investments total distributable cash flow

which of the following are components of cash flow from assets

Capital Spending Change in networking capital operating cash flow

Easiest to hardest (turning assets into cash)

Cash equivalents accounts receivable inventory plants and equipment

Which of these questions can be answered by reviewing the balance sheet?

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

net income refers to money earned

after interest and taxes

in the long run, costs may be considered as

all variable

noncash items do not affect

cash flow

Assets can be categorized as

current and fixed tangible and intangible

networking capital equals

current assets-current liabilities

marginal tax rates are the most important tax rates because

incremental cash flows are taxed at marginal tax rates financial decisions are normally based on new cash flows

the price at which buyers and sellers would trade is

market value

non cash items directly affect ___ but do not affect __

net income; cash flow

two ways in which financial accountants classify costs?

period, product

Liquidity has two dimensions which are the ability to:

quickly convert assets into cash without significant loss in value

Financial leverage refers to a firms

use of debt in its capital structure

when is revenue recognized on an income statement

when earnings process is virutually completed when the exchange of goods and services is completed

physical assets are termed

tangible assets

what does stockholders equity represent?

a residual claim against the firms assets

Operating cash flow

is usually positive is a sign of trouble if negative

Under GAAP, assets are carried on a firm's balance sheet at

historical cost book value

the purpose of a ___ is to measure performance over a set period of time

income statement

A balance sheet reflects a firms

Economic value at a specific time accounting value on a specific date

which of the following are classified as liabilities on a firms balance sheet?

deferred taxes accounts payable

in finance, the value of a firm depends on its ability to generate

cash flows