Chapter 2: Financial Statements, Taxes, and cash flow

Assets can be categorized as:

- current and fixed assets - tangible and intangible assets

Liquidity has two dimensions which are the ability to:

quickly convert assets into cash without significant loss in value

Physical assets are termed Blank______ assets.

tangible

The market value of an item is: Multiple choice question.

the cash value you'd get if you sold it.

Financial leverage refers to a firm's Blank______.

use of debt in its capital structure

Which of the following is the balance sheet equation?

Assets equal liabilities plus stockholders' equity.

True or false: Current assets plus current liabilities equals net working capital.

False, CA minus CL equals NWC

Which of these questions can be answered by reviewing a firm's balance sheet?

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

A balance sheet reflects a firm's:

accounting value on a specific date.

The balance sheet identity shows that stockholders' equity equals assets Blank______ liabilities.

minus