Financial Statements

On its fiscal year ended February 3, 2017 statement of cash flows, Dell Technologies Inc. reports the following (in millions): Net cash flow operating activities $2,222 Net cash from investing activities (31,256 ) Cash at the beginning of the year 6,576 Change in cash during the year 2,898 What did Dell report for "Net cash from financing activities" during fiscal year ended 2017?

$31,932 million cash inflow

In its fiscal 2016 annual report, Nike, Inc. reported cash of $3,138 million at year end. The statement of cash flows reports the following (in millions): Net cash from operating activities $3,096 Net cash from investing activities (1,034) Net cash from financing activities (2,776 ) What was the balance in Nike's cash account at the start of fiscal 2016?

3138-3096 = 42 42+1034 = 1076 1076+2776 = $3,852 million

Lowell Inc.'s 2016 financial statements show operating profit before interest and tax of $519,233 thousand, net income of $318,022 thousand, provision for income taxes of $91,720 thousand and net nonoperating expense before tax of $109,491 thousand. Assume Lowell's statutory tax rate for 2016 is 37%. Lowell's 2016 tax shield is:

40,512 thousand

In its fiscal year ended January 28, 2017 balance sheet, Big Lots, Inc., reported cash and cash equivalents at the start of the year of $54,144 thousand. By the end of the year, the cash and cash equivalents had decreased to $51,164 thousand. The company's statement of cash flows reported cash from operating activities of $311,925 thousand, cash from financing activities of $(230,204) thousand. What amount did the company report for cash from investing activities?

84,701

Prestige Company has determined the following information for its recent fiscal year. Days inventory outstanding 42.7 days Days payable outstanding 56.8 days Days sales outstanding 91.3 days Compute Prestige Company's cash conversion cycle.

91.3 + 42.7 - 56.8 = 77.2

Which of the following is included as a component of stockholders' equity?

A) Buildings B) Retained earnings (x) C) Prepaid property taxes D) Accounts payable E) Dividends

Cari's Bakery, Inc., began operations in October 2017. The owner contributed cash of $18,000 and a delivery truck with fair value of $24,000 to the company. Which of the following describes how these transactions would affect the company's equity accounts?

A) Increase contributed capital by $42,000 (x) B) Increase earned capital by $42,000 C) Increase contributed capital by $18,000 and earned capital by $24,000 D) Increase earned capital by $18,000 and contributed capital by $24,000 E) None of the above

During fiscal 2016,Stanley Black & Decker Corporation reported Net income of $965.3 million and paid dividends of $330.9 million. Which of the following describes how these transactions would affect Stanley Black and Decker's equity accounts? (in millions)

A) Increase contributed capital by $965.3 and decrease earned capital by $330.9 B) Decrease contributed capital by $330.9 and increase earned capital by $965.3 C) Increase contributed capital by $634.4 D) Increase earned capital by $634.4 (x) E) None of the above

An example of a situation in which company needs credit for investing activities is:

A) Mergers and acquisitions (x) B) Seasonal sales patterns C) Start-up operating losses D) Refinancing of debt

Which of the following are included in current assets?

A) Prepaid rent (x) B) Taxes payable C) Automobiles D) Common stock E) None of the above

Which one of the following is not a current liability?

A) Taxes payable B) Accounts payable C) Wages payable D) Wage expense (x) E) None of the above

During fiscal 2016, Shoe Productions recorded inventory purchases on credit of $337.8 million. The financial statement effect of these purchase transactions would be to:

A. Increase liabilities (Accounts payable) by $337.8 million (x) B. Decrease cash by $337.8 million C. Increase expenses (Cost of goods sold) by $337.8 million D. Decrease noncash assets (Inventory) by $337.8 million E. Both A and D

How would a purchase $400 of inventory on credit affect the income statement?

A. It would increase liabilities by $400. B. It would decrease liabilities by $400. C. It would increase noncash assets by $400. D. Both A and C E. None of the above (x)

In 2016, Caterpillar Inc. reported the following (in millions): CA: $31,967 LT Assets: $42,737 CL: $26,132 Total Liab: $61,491 What amount did Caterpillar report as equity in 2016?

CA+LT Assets 31967+42737 = 74704 74704-Total Liab (61491) Equity = 13213

In 2016, Nordstrom, Inc. reported the following (in millions): CA: $3,242 CL: $3,029 LT Liab: $3,959 Equity: $870 What amount did Nordstrom report as total assets?

CL+LT Liab+Equity 3029+3959+870 = 7858 TL = TA so 7858 = TA

Expected credit loss is calculated as:

Chance of default X Loss given default.

The variable EBIT divided by Total Assets in the Altman Z-Score measures which of the following concepts?

Current level of profitability

The cash conversion cycle is computed as:

Days sales outstanding + Days inventory outstanding - Days payable outstanding

Assets are reported on the balance sheet at their current market value.

False

The book value of stockholders' equity (the amount reported on the balance sheet) is most typically equal to the market value of the equity of a company

False

How would cash collected on accounts receivable affect the balance sheet?

Increase liabilities and decrease equity

Commercial paper is issued with maturities of less than 270 days because:

It exempts the borrowing from SEC regulation

How would a purchase of inventory on credit affect the income statement?

It would increase liabilities It would decrease retained earnings It would increase assets Both A and C, above None of the above (x)

The 2016 balance sheet of Lowell Company shows average Lowell shareholders' equity attributable to controlling interest of $9,996 million, net operating profit after tax of $2,308 million, net income attributable to Lowell of $2,513 million, and common shares issued of 950.044 million. Assume the company has no preferred shares issued. Lowell's return on equity (ROE) for the year is:

NI/Avg Eq 2513/9996 = .251 25.1%

The 2016 financial statements of The Times Company reveal average shareholders' equity attributable to controlling interest of $837,283 thousand, net operating profit after tax of $48,032 thousand, net income attributable to The Times Company of $29,068 thousand, and average net operating assets of $354,414 thousand. The company's return on equity (ROE) for the year is:

NI/Avg Eq 29068/837283 = .0347 3.5%

In 2016, Delphi Automotive PLC had current assets of $5,419 million and current liabilities of $4,148 million. The firm's net working capital is:

NWC = CA - CL 5,419-4148 = 1271

ROE is computed as:

Net income attributable to controlling interest / Average equity attributable to controlling interest [RNOA + (FLEV × Spread)] x NCI ratio

The 2017 balance sheet of Lowell Inc. shows total assets of $8,271 million, operating assets of $6,566 million, operating liabilities of $3,527 million, and shareholders' equity of $3,688 million. Lowell's 2017 net operating assets are:

OA - OL 6566-3527 = 3039

A letter of credit:

Provides a guarantee of payment from the buyer, reducing the credit risk to the seller

The overarching purpose of credit risk analysis is to:

Quantify potential credit losses

During fiscal year-end 2016, Kohl's Corporation reports the following (in $ millions): net income of $556, retained earnings at the end of the year of $12,522 and retained earnings at the beginning of the year of $12,329. Assume that there were no other retained earnings transactions during fiscal 2016. What dividends did the firm pay in fiscal year ended January 28, 2017?

RE Beg + NI - Div = RE End 12329 + 556 - Div = 12522 Div = 363

Caterpillar Inc. reports a net loss for 2016 of $(67) million, retained earnings at the end of the year of $27,377 million, and dividends during the year of $1,802 million. What was the company's retained earnings balance at the start of 2016?

RE Beg + NI - Div = RE End RE Beg - 67 - 1802 = 27377 RE Beg: 29246

The 2016 financial statements of The Times Company reveal average shareholders' equity attributable to controlling interest of $837,283 thousand, net operating profit after tax of $48,032 thousand, net income attributable to The Times Company of $29,068 thousand, and average net operating assets of $354,414 thousand. The company's return on net operating assets (RNOA) for the year is:

RNOA = NOPM * NOAT NOPM = 48032/29068 = 1.65 NOAT = 29,068/354,414 = .082 .082 * 1.65 = .136 13.6%

. When considering the results of an Altman Z-Score analysis a score of 4.20 would suggest?

The company is healthy and there is a low bankruptcy potential in the short-term

When using Altman's Z-Score a Type I error occurs when:

The company's Z-score indicates the company is healthy, and the company goes bankrupt

Many companies have cyclical operating cash needs due to:

The seasonality of sales

In its December 31, 2016 financial statements, Harley-Davidson reported the following (in millions): LT Assets: $6,036 CL: $2,863 LT Liab: $5,107 Total Liab: $7,970 Equity: $1,920 At December 31, 2016, current assets amount to:

Total Liab + Equity 7,970 + 1,920 = 9,890 9,890 - LT Assets (6,036) CA= 3,854

Assets are listed on the balance sheet in order of liquidity and liabilities are listed in order of maturity

True

In order for an asset to be reported on the balance sheet, it must be owned or controlled by the company and be expected to provide future benefits

True

Liabilities and equities are both claims against the assets of a company.

True

Net working capital = Current assets - current liabilities

True

Identify which of the following items would be reported in the balance sheet. a. Cash d. Wage expense g. Net income b. Sales e. Wages payable h. Inventory c. Long-term debt f. Retained earnings i. Cost of goods sold Items reported in the balance sheet would include:

a, c, e, f, and h