finance

What type of business organization has all the respective rights and privileges of a legal person?

Corperation

Which one of the following is included in working capital management? I. Accounts payable II. Fixed assets III. Inventory IV. Accounts receivable

Accounts Payable, Inv, Accounts Receivable

The equity portion of a company's balance sheet for end of 2015 and 2016 is shown below: 2015 2016 Common Stock (0.50 par) $4,500,000 $4,800,000 Capital Surplus $8,600,000 $11,300,000 Retained Earnings $1,967,500 $4,492,000 Calculate the average price per share at which new shares were sold in 2016.

Amount added to common stock line = 4800000 - 4500000 = $300,000 Par value of each share = $0.50. Thus, total number of shares issued = 300000/0.50 = 600,000. Total Proceeds from issue = (4800000 - 4500000) + (11300000 - 8600000) = $3,000,000. Price per share = 3000000/600000 = $5.00

Your firm has total assets of $79,600; fixed assets of $43,100; long term debt of $29,200 and short term debt of $19,900. What is the amount of net working capital?

Current assets = 79,600 - 43,100 = $36,500 Net working capital = Current assets - Current liabilities = 36,500 - 19,900 = $16,600

A firm has net working capital of $1,770. Long-term debt is $4,180, total assets are $11,830, and fixed assets are $3,910. What is the amount of the total liabilities?

Current assets = total assets - fixed assets = 11830 - 3910 = $7,920 Net working capital = Current assets - Current liabilities. Thus, Current Liabilities = Current assets - Net working capital = 7920 - 1770 = $6,150 Total liabilities = current liabilities + Long term debt = 6150 + 4180 = $10,330

NWC of 560 long term debt of 3,970 total assets are 7390 fixed assets are 3910 Total liablitlies

Current assets[7390fixedassets-3910=3480 current liablilities-3480-560=2920-total liablilites=2920+3970=

A firm has return on assets (ROA) of 15 percent, and debt-equity ratio of 60 percent. Calculate the firm's return on equity (ROE).

Debt-Equity ratio, TD/TE = 0.60. Let total equity, TE = 100; Then TD = 60 and total assets, TA = TD + TE = 160. ROA = 15 percent. Thus, NI/TA = 0.15. Thus, NI/160 = 0.15; NI = 160(0.15) = 24 ROE = NI/TE = 24/100 = 24 percent.

In 2016, MECCS Inc. had earnings before interest and taxes (EBIT) of $2,847,000; depreciation expense of $200,000; sales of $6,720,000; interest expense of $240,000 and tax rate of 34 percent. If MECCS paid out $920,000 in cash dividends, how much did MECCS add to retained earnings?

EBT = EBIT - Interest Expense = 2,847,000 - 240,000 = $2,607,000 Net Income = 2,607,000*(1 - 0.34) = $1,720,620 Net Income = Dividends Paid + Amount Added to Retained Earnings Amount Added to Retained Earnings = 1,720,620 - 920,000 = $800,620

MECCS Inc. has sales of $1,270,000; costs of $643,000; depreciation expense of $109,000; interest expense of $72,000; and tax rate of 35 percent. Calculate the net income of the firm.

Feedback: EBIT = Sales - Costs - Depreciation = 1,270,000 - 643,000 - 109,000 = $518,000 EBT = EBIT - Interest Expense = 518,000 - 72,000 = $446,000 Taxes = 0.35*446,000 = $156,100 Net Income = EBT - Taxes = 446,000 - 156,100 = $289,900 Alternatively, after calculating the Earnings before Taxes to obtain $446,000; Net Income can be obtained as follows: Net Income = 446000*(1 - 0.35) = 446,000 * 0.65 = $289,900

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership

Limited partner

A firm reported Net Fixed Assets of $2,674,000 on its end-of-year 2014 balance sheet and Net Fixed Assets of $3,192,000 on its end-of-year 2015 balance sheet. If the depreciation expense of the firm's 2015 income statement was $520,000, what was the firm's net capital spending in 2015?

Net Capital Spending = NFAend - NFAbeg + D = 3,192,000 - 2,674,000 + 520,000 = 1,038,000

During 2016, Dazang Inc. had sales of $11,874,000. Cost of goods sold, administrative and general expenses, and depreciation expense were $4,620,000, $1,704,000, and $910,000 respectively. In addition, the company had interest expense of $540,000 and a tax rate of 34 percent. What is Dazang's operating cash flow?

OCF = EBIT + Depreciation - Taxes Taxes = 0.34(11874000 - 4620000 - 1704000 - 910000 - 540000) = 0.34(4,100,000) = $1,394,000 OCF = 11874000 - 4620000 - 1704000 - 1394000 = $4,156,000

XYZ Inc. has total debt ratio of 0.42. Calculate the company's equity multiplier.

TD/TA = 0.42 Let Total Assets, TA = 100; Then, TD = 42 and TE = 100 - 42 = 58 Equity Multiplier = TA/TE = 100/58 = 1.72

A firm's balance sheets as of the December 31, 2015 and 2016 show the following items: 2015: Cash = $9,916,500; Account Receivable = $9,000,000; Inventory = $4,500,000; Gross Fixed Assets = $10,972,000; Accumulated Depreciation = $1,243,000; Retained Earnings = $1,967,500; Capital Surplus = $8,600,000; Common Stock ($0.50 par) = $4,500,000; Notes Payable = $8,921,000; Long term debt = $2,500,000; Accounts Payable = $6,657,000. 2016: Cash = $11,098,000; Account Receivable = $7,600,000; Inventory = $5,200,000; Gross Fixed Assets = $13,774,000; Accumulated Depreciation = $1,675,000; Retained Earnings = $1,967,500; Capital Surplus = $11,300,000; Common Stock ($0.50 par) = $4,800,000; Notes Payable = $7,773,000; Long term debt = $1,500,000; Accounts Payable = $6,132,000. Calculate the total proceeds from sale of new shares in 2016.

Proceeds from sale of new common stock are added to the common stock and capital surplus lines. Total proceeds from sale = (4800000 - 4500000) + (11300000 - 8600000) = $300,000 + $2,700,000 = $3,000,000

During 2016, Dazang Inc. had sales of $11,874,000. Cost of goods sold, administrative and general expenses, and depreciation expense were $4,620,000, $1,704,000, and $910,000 respectively. In addition, the company had interest expense of $540,000 and a tax rate of 34 percent. What is Dazang's net income for 2016?

Taxable Income = 11,874,000 - 4,620,000 - 1,704,000 - 910,000 - 540,000 = $4,100,000 Net Income = 4,100,000(1 - 0.34) = 0.66(4100000) = $2,706,000

A firm has common stock of $8,600; paid-in capital surplus of $11,700; total liabilities of $12,900; current assets of $15,100; and fixed assets of $27,200. What is the amount of shareholders' equity?

Total assets = Current assets + fixed assets = 15,100 + 27,200 = $42,300 Total assets = Total Liabilities + Shareholders' equity 42,300 = 12,900 + Shareholders' equity. Shareholders' equity = 42,300 - 12,900 = $29,400

Shelton Inc. has sales of $23.8 million; total equity of $31.3 million; and total debt of $16.7 million. If Shelton's profit margin is 8 percent, calculate the company's return on assets (ROA).

Total assets = total equity + total debt = 31.3 + 16.7 = $48 million NI/Sales = Profit Margin; NI/23.8 = 0.08. Net Income, NI = 0.08*23.8 = $1.904 million ROA = NI/Total Assets = 1.904/48 = 0.0397 = 3.97 percent

If Kraffty Inc. has a profit margin of 7.5 percent, total asset turnover of 1.65 and ROE of 18.2 percent, what is the firm's debt-equity ratio?

Use the DuPont identity: ROE = NI/TE = NI/Sales x Sales/TA x TA/TE 0.182 = 0.075 * 0.165 * Equity Multiplier; Equity Multiplier, TA/TE = 1.47 TA = TE + TD. Thus, (TE + TD)/TE = 1.47; 1 + TD/TE = 1.47 Debt-Equity Ratio, TD/TE = 1.47 - 1 = 0.47

a conflict of interest between corporate shareholders and the corporate managers

agency problem

the management of a firm's long-term investments

capital budgeting

which of the following is the is a capital structure decision

determining how much debt should be assumed to fun a project

Which of the following individuals have unlimited liability based on their ownership interest?

general partner and sole proprioter

financial statements summarizes a firm's revenues and expenses over a period of time

income statement

Negative capital true

it may be a negative value

the primary adv of being a limited partner instead of a gen partner

maximum loss limited to the capital investment

680 in inventory, 2140 in fixed assets 210 in accounts receivable 250 accounts payable and 80 in cash

nwc=680+210+80-250=720

Which one of the following is an agency cost

paying financial incentives to management to keep shareholders' interest as top priority

Which one of the following is an agency cost?

paying financial incentives to management to keep shareholders' interest as top priority

A business owned by a solitary individual who has unlimited liability for its debt is called a

sole proprietorship

Income statement true

taxes reduce both net income and operating cash flows

Correct CadMann Inc. had $289,000 in 2016 taxable income. Using the rates table below, calculate the company's 2016 income taxes. Taxable Income Tax Rate $ 0 - 50,000 15% 50,001 - 75,000 25% 75,001 - 100,000 35% 100,001 - 335,000 39%

total Tax = 0.15(50000) + 0.25(25000) + 0.35(25000) + 0.39(289000 - 100000) = 7500 + 6250 + 8750 + 73710 = $96,210