FIN 300 Ch 2 HW

Roscoe's fixed assets were purchased three years ago for $1.8 million. These assets can be sold to Stewart's today for $1.2 million. Roscoe's current balance sheet shows net fixed assets of $960,000, current liabilities of $348,000, and net working capital of $121,000. If all the current assets were liquidated today, the company would receive $518,000 cash. The book value of the firm's assets today is _____ and the market value is ____. $1,081,000; $1,308,000 $1,081,000; $1,718,000 $1,307,000; $1,429,000 $1,429,000; $1,308,000 $1,429,000; $1,718,000

$1,429,000; $1,718,000

Six months ago, Benders Gym repurchased $140,000 of its common stock. The company pays regular dividends totaling $18,500 per quarter. What is the amount of the cash flow to stockholders for the past year if 1,200 new shares were issued and sold for $38 a share? -$10,000 -$20,400 $28,500 $74,000 $168,400

$168,400

Dixie's sales for the year were $1,678,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $1,141,000, $304,000, and $143,000, respectively. In addition, the company had an interest expense of $74,000 and a tax rate of 34 percent. What is the operating cash flow for the year? $227,560 $271,420 $223,330 $285,400 $217,700

$227,560

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent? $87,620 $89,540 $91,220 $93,560 $95,240

$93,560

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year. The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900. What is the amount of the cash flow to stockholders for the last year? -$171,500 -$86,700 $21,200 $95,700

$95,700

Marcie's has sales of $179,600,depreciation of $14,900, costs of goods sold of $138,200, and other costs of $28,400. The tax rate is 35 percent. What is the net income? -$1,235 $382 $1,204 $14,660 $13,665

-$1,235

Net working capital is defined as: the depreciated book value of a firm's fixed assets. the value of a firm's current assets. available cash minus current liabilities. total assets minus total liabilities. current assets minus current liabilities.

current assets minus current liabilities.

Cash flow to stockholders is defined as: cash flow from assets plus cash flow to creditors. operating cash flow minus cash flow to creditors. dividends paid plus the change in retained earnings. dividends paid minus net new equity raised. net income minus the addition to retained earnings.

dividends paid minus net new equity raised.

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital: had to increase. had to decrease. remained constant. could have either increased, decreased, or remained constant. was unaffected as the changes occurred in the firm's current accounts.

had to decrease

Financial leverage: increases as the net working capital increases. is equal to the market value of a firm divided by the firm's book value. is inversely related to the level of debt. is the ratio of a firm's revenues to its fixed expenses. increases the potential return to the stockholders.

increases the potential return to the stockholders.

Given a profitable firm, depreciation: increases net income. increases net fixed assets. decreases net working capital. lowers taxes. has no effect on net income.

lowers taxes

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the: average tax rate. variable tax rate. marginal tax rate. fixed tax rate. ordinary tax rate.

marginal tax rate.

A balance sheet shows beginning values of $56,300 for current liabilities and$289,200 for long-term debt. The ending values are $61,900 and $318,400, respectively. The income statement shows interest paid of $29,700 and dividends of $19,000. What is the amount of the net new borrowing? $29,200 $40,450 $34,800 $70,150 $58,900

$29,200

AV Sales has net revenue of $513,000 and costs of $406,800. The depreciation expense is $43,800,interest paid is $11,200, and dividends for the year are$4,500. The tax rate is 33 percent. What is the addition to retained earnings? $38,804 $34,304 $28,120 $29,804 $30,450

$29,804

During the past year, Yard Services paid $36,800 in interest along with $2,000 in dividends. The company issued $3,000 of stock and $16,000 of new debt. The company reduced the balance due on its old debt by $18,400. What is the amount of the cash flow to creditors? $8,200 $55,200 $2,400 $39,200 $15,800

$39,200

Net working capital includes: a land purchase. an invoice from a supplier. non-cash expenses. fixed asset depreciation. the balance due on a 15-year mortgage.

an invoice from a supplier.

The market value: of accounts receivable is generally higher than the book value of those receivables. of an asset tends to provide a better guide to the actual worth of that asset than does the book value. of fixed assets will always exceed the book value of those assets. of an asset is reflected in the balance sheet. of an asset is lowered each year by the amount of depreciation expensed for that asset.

of an asset tends to provide a better guide to the actual worth of that asset than does the book value.

Cash flow from assets is defined as: the cash flow to shareholders minus the cash flow to creditors. operating cash flow plus the cash flow to creditors plus the cash flow to shareholders. operating cash flow minus the change in net working capital minus net capital spending. operating cash flow plus net capital spending plus the change in net working capital. cash flow to shareholders minus net capital spending plus the change in net working capital.

operating cash flow minus the change in net working capital minus net capital spending.

Shareholders' equity is best defined as: the residual value of a firm. positive net working capital. the net liquidity of a firm. cash inflows minus cash outflows. the cumulative profits of a firm over time.

the residual value of a firm.