FIN Chapter 2

From the income statement, the corporation had a net income of $724 million for the year. Total dividends were $106 million. There were 400 million shares outstanding. How much is the dividends per share?

$0.265

From the income statement, the corporation had a net income of $724 million for the year. Total dividends were $106 million. There were 400 million shares outstanding. How much is the earnings per share?

$1.18

Wilbur's Weddings has sales of $546,000, costs of $295,000, depreciation expense of $37,000, interest expense of $15,000, and a tax rate of 21 percent. The firm paid $45,000 in cash dividends. What is the addition to retained earnings?

$112,210

Griffin's Goat Farm, Inc., has sales of $672,000, costs of $334,000, depreciation expense of $78,000, interest expense of $49,000, and a tax rate of 25 percent. What is the net income for this firm?

$158,250

Global Tours has beginning current assets of $1,360, beginning current liabilities of $940, ending current assets of $1,720, and ending current liabilities of $1,080. What is the change in net working capital?

$220

Logano Driving School's 2017 balance sheet showed net fixed assets of $4 million, and the 2018 balance sheet showed net fixed assets of $6.8 million. The company's 2018 income statement showed a depreciation expense of $845,000. What was net capital spending for 2018?

$3,645,000

Disturbed, Inc., had the following operating results for the past year: sales = $22,563; depreciation = $1,360; interest expense = $1,096; costs = $16,515. The tax rate for the year was 40 percent. What was the company's operating cash flow?

$4,611

The balance sheet of XYZ Company is shown below. What is the Net Working Capital for the company?

$60

What is the Net Working Capital for Capella Corporation?

$190

A company has net working capital of $1,888. If all its current assets were liquidated, the company would receive $5,819. What are the company's current liabilities?

$5,819-$1,888= $3,931

Which one of the following accounts is the most liquid?

Accounts Receivable

Which one of the following is a current asset?

Accounts receivable

Net working capital represents current assets plus current liabilities.

False

The Balance Sheet Identity is:

Assets = Liabilities + Owners Equity

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

Balance Sheet

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Income statement

Which one of the following is classified as a tangible fixed asset?

Production equipment

Which one of the following statements concerning corporate income taxes is correct for 2018?

The federal income tax on corporations is a flat-rate tax with the same rate applying to all levels of taxable income.

Earnings per share can be calculated as Net Income/Total shares outstanding.

True

Wims, Inc., has current assets of $5,200, net fixed assets of $25,200, current liabilities of $4,250, and long-term debt of $9,400. a.What is the value of the shareholders' equity account for this firm? (Do not round intermediate calculations.) b.How much is net working capital? (Do not round intermediate calculations.)

a. $16,750 b. $950

The book value of a firm is:

based on historical cost.

A _________ __________ is one that has a life of less than one year, meaning they must be paid within the year.

current liability

Depreciation for a tax-paying firm:

increases expenses and lowers taxes.

As the degree of financial leverage increases, the:

probability a firm will encounter financial distress increases.

Shareholders' equity:

represents the residual value of a firm.

The first thing reported on an income statement would usually be:

revenues