Managerial Finance (Ch. 3)
which of the following represent cash outflows from financing activities?
-payment of dividends -repurchase of stock -repayment of debt
corporations with income over $18.33 million pay a corporate tax rate of
21%
Which of the following financial statements are public companies required to file with the SEC each quarter?
Balance sheet, income statement, statement of cash flows
Which of the following explain why a firm's cash flows differ from the net income?
The income statement does not recognize capital expenditures as expenses in the year purchased -The income statements spreads capital expenditure expenses over time - the income statement uses the accrual accounting method
True or false: In order to calculate cash produced by the business it is necessary to add back the depreciation charge.
True
Financial managers must track _______ inflows and outflows in order to pay interest to banks and dividends to shareholders.
cash
the purpose of depreciation is to allocate the original ______ of the asset over its life
cost
the largest single expense of a merchandising firm is called
cost of goods sold
Market values of assets and liabilities measure _______ value. Book values are based on ________ value.
current, original
corporations can deduct their expense to reduce taxable income, but they cannot deduct
dividends to shareholders
The rules governing the depreciation of asset values _____ reflect actual loss of market value.
do not
market values of assets and liabilities generally
do not equal their book values
cash generated for investors after the firm pays for new capital investments is known as
free cash flow
When a company pays more for an acquired business than what it is worth the difference is shown in an account entitled _____
goodwill
Shows how profitable a firm has been over the course of the past year
income statement
represents a cash inflow from financing activities?
issuing stock
Sources of funds raised by the company are known as
liabilities
Debt that needs to be repaid after one year is known as
long-term liabilities
the tax rate that an individual pays on each extra dollar of income known as the
marginal tax rate
Price at which shareholders can sell their shares is known as the ____ value
market
managers who wish to keep their shareholders happy will focus on
market value (current value)
Liabilities represent
money owed by the company
The operating activities section of the statement of cash flows begins with
net income
Current assets- current liabilites=
net working capital
Free cash flow is available for which of the following uses?
payment of debt, payment of dividends , payment of interest to investors
earnings that a firm keeps and reinvests are referred to as
retained earnings
The book value of _____ is generally close to the market value.
short-term liabilities
the financial statement that shows the firm's cash inflows and outflows from operations as well as from its investments and financing activities is called the:
statement of cash flows
The right-hand portion of a company balance sheet shows
where the money to buy assets came from
The net value or book value of an asset is determined by subtracting the ____ from the assets gross value.
accumulated depreciation
in the operating activities of the statement of cash flows, net income is adjusted for depreciation by
adding depreciation
The financing activities of the statement of cash flows is presented
after investing activities
Financial statements called 10Ks that are provided _____ contain more detailed information about the outcome of the company for the entire year.
annually
a personals total tax bill divided by their total income is known as
average tax rate
Fixed assets include
buildings, equipment, vehicles
