FIN chap 2

Andre's Dog House had current assets of $67,200 and current liabilities of $71,100 last year. This year, the current assets are $82,600 and the current liabilities are $85,100. The depreciation expense for the past year is $9,600 and the interest paid is $8,700. What is the amount of the change in net working capital?

$1,400

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

$10,400

Gallagher's Supply has sales of $387,000 and costs of $294,500. The depreciation expense is $43,800. Interest paid equals $18,200 and dividends paid equal $6,500. The tax rate is 35 percent. What is the addition to retained earnings?

$13,325

During the past year, Ernst Electrical Services paid $36,800 in interest along with $48,000 in dividends. The company issued $130,000 of stock and $100,000 of new debt. The company reduced the balance due on the old debt by $225,000. What is the amount of the cash flow to creditors?

$161,800

The Good Life Store has sales of $79,600. The cost of goods sold is $48,200 and the other costs are $18,700. Depreciation is $8,300 and the tax rate is 34 percent. What is the net income?

$2,904

Blasco Printing has net income of $26,310 for the year. At the beginning of the year, the firm had common stock of $35,000, paid-in surplus of $11,200, and retained earnings of $48,420. At the end of the year, the firm had total equity of $142,430. The firm does not pay dividends. What is the amount of the net new equity raised during the year?

$21,500

Keyser Materials paid $7,500 in dividends and $28,311 in interest over the past year while net working capital increased from $13,506 to $18,219. The company purchased $42,000 in net new fixed assets and had depreciation expenses of $16,805. During the year, the firm issued $25,000 in net new equity and paid off $11,000 in long-term debt. What is the amount of the cash flow from assets?

$21,811

The Embroidery Shoppe had beginning retained earnings of $18,670. During the year, the company reported sales of $83,490, costs of $68,407, depreciation of $8,200, dividends of $950, and interest paid of $478. The tax rate is 35 percent. What is the retained earnings balance at the end of the year?

$21,883.25

A firm has earnings before interest and taxes of $25,380 with a net income of $14,220. The taxes amounted to $5,400 for the year. During the year, the firm paid out $43,800 to pay off existing debt and then later borrowed an additional $24,000. What is the amount of the cash flow to creditors?

$25,560

The Toy Store has beginning retained earnings of $28,975. For the year, the company earned net income of $4,680 and paid dividends of $1,600. The company also issued $3,000 worth of new stock. What is the value of the retained earnings account at the end of the year?

$32,055

The Pizza Parlor paid $3,500 in dividends and $17,600 in interest over the past year. Sales totaled $211,800 with costs of $167,900. The depreciation expense was $16,500. The applicable tax rate is 34 percent. What is the amount of the operating cash flow?

$40,568

Frank Town Farms has sales of $481,600, costs of $379,700, depreciation expense of $32,100, and interest paid of $8,400. The tax rate is 32 percent. How much net income did the firm earn for the period?

$41,752

Global Exporters has total assets of $84,300, net working capital of $22,900, owner's equity of $38,600, and long-term debt of $23,900. What is the value of the current 4 assets?

$44,700

Global Exporters has total assets of $84,300, net working capital of $22,900, owner's equity of $38,600, and long-term debt of $23,900. What is the value of the current assets?

$44,700

Bridgewater Furniture has sales of $811,000, costs of $658,000, and interest paid of $21,800. The depreciation expense is $56,100 and the tax rate is 34 percent. At the beginning of the year, the firm had retained earnings of $318,300 and common stock of $250,000. At the end of the year, the firm has retained earnings of $322,500 and common stock of $280,000. What is the amount of the dividends paid for the year?

$45,366

Blasco Printing has net income of $26,310 for the year. At the beginning of the year, the firm had common stock of $35,000, paid-in surplus of $11,200, and retained earnings of $48,420. At the end of the year, the firm had total equity of $142,430. The firm does not pay dividends. What is the amount of the net new equity raised during the year?

$48,900

A firm has net income of $2,610 and a tax rate of 33 percent. The revenue is $20,400, costs are 78 percent of sales, and interest expense is $100. What is the depreciation expense for the year?

$492

Green Roofs, Inc. has current liabilities of $14,300 and accounts receivable of $7,800. The firm has total assets of $43,100 and net fixed assets of $23,700. The owners' equity has a book value of $21,400. What is the amount of the net working capital?

$5,100

The financial statements of Edgewater Marina reflect depreciation expenses of $21,600 and interest expenses of $27,900 for the year. The current assets increased by $31,800 and the net fixed assets increased by $28,600. What is the amount of the net capital spending for the year?

$50,200

Morgantown Movers has net working capital of $11,300, current assets of $31,200, equity of $53,400, and long-term debt of $11,600. What is the amount of the net fixed assets?

$53,700

Pete's Warehouse has net working capital of $2,400, total assets of $19,300, and net fixed assets of $10,200. What is the value of the current liabilities?

$6,700

The Plaza Cafe has an operating cash flow of $78,460, depreciation expense of $8,960, and taxes paid of $21,590. A partial listing of its balance sheet accounts is as 5 follows: What is the amount of the cash flow from assets

$61,246

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920. The depreciation expense for the year is $46,080 and the interest expense is $11,460. What is the amount of the net capital spending?

$69,800

For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200. What is the amount of the dividends paid?

$7,600

Gino's Winery has net working capital of $29,800, net fixed assets of $64,800, current liabilities of $34,700, and long-term debt of $23,000. What is the value of the owners' equity?

$71,600

Home Repairs, Inc. incurred depreciation expenses of $21,900 last year. The sales were $811,400 and the addition to retained earnings was $14,680. The firm paid interest of $9,700 and dividends of $1,100. The tax rate was 34 percent. What was the amount of the costs incurred by the firm?

$755,890.91

The owners' equity for The Buck Store was $58,900 at the beginning of the year. During the year, the company had aftertax income of $34,200, of which $2,200 was paid in dividends. Also during the year, the company repurchased $6,500 of stock from one of the shareholders. What is the value of the owners' equity at year end?

$84,400

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?

$93,560

The balance sheet of Retailers, Inc. has the following balances: What is the amount of the change in net working capital?

-$8,100

Which one of the following is included in net working capital?

Accounts payable

Which one of the following will increase the cash flow from assets for a tax-paying firm, all else constant?

An increase in depreciation

Which one of the following is a non-cash item

Annual depreciation on fixed assets

Which one of the following statements concerning the balance sheet is correct?

Assets are listed in descending order of liquidity.

The cash flow that is available to distribute to creditors and to stockholders is called:

Cash flow from assets

Which one of the following will decrease the liquidity level of a firm?

Cash purchase of inventory

Which one of the following is an intangible fixed asset?

Copyright

An increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm?

Depreciation

The net working capital includes which of the following accounts: I- Accounts receivables II- Retained earnings III- Long-term debt IV- Cash

I and IV only

All else equal, an increase in which one of the following will decrease owners' equity?

Increase in accounts payable

Which one of the following relates to a negative change in net working capital?

Increase in current liabilities with no change in current assets for the period

Which one of the following actions will increase the net working capital of a firm?

Issuing new shares of the company and using the funds to increase the inventory level

Depreciation does which one of the following for a profitable firm?

Lowers taxes

Which one of the following will decrease the net working capital of a firm?

Making a payment on a long-term debt

Which one of the following statements related to the income statement is correct?

Net income is distributed either to dividends or retained earnings.

Which one of the following decreases net income but does not affect the operating cash flow of a firm which owes no taxes for the current year?

Noncash item

The cash generated from a firm's normal business activities is referred to as the:

Operating cash flow

An increase in which one of the following will increase net income?

Revenue

Which one of the following will increase cash flow from assets but not affect the operating cash flow?

Sale of a fixed asset

Liquidity can be defined as

The ease and speed with which an asset can be converted to cash without substantial loss in value

Which one of the following statements is correct concerning a firm's fixed assets?

The market value is the expected selling price in today's economy.

Which one of the following statements concerning market and book values is correct?

Which one of the following statements concerning market and book values is correct?

Which one of the following statements is correct?

Which one of the following statements is correct?

All else equal, net working capital increases when:

accounts receivables increases more than accounts payable increases

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

balance sheet.

Cash flow to creditors is equal to:

beginning long-term debt minus ending long-term debt plus interest paid.

Highly liquid assets:

can be sold quickly at close to full value

Firms that compile financial statements according to GAAP:

can still manipulate their earnings to some degree.

Net working capital is defined as:

current assets minus current liabilities

Cash flow to stockholders is defined as

dividends paid minus net new equity raised.

Cash flow to stockholders is defined as:

dividends paid minus net new equity raised.

Net capital spending is equal to:

ending net fixed assets minus beginning net fixed assets plus depreciation.

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 decrease.

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital

has to decrease

The accounting statement which measures the revenues, expenses, and net income of a firm over a period of time is called the:

income statement.

Financial leverage:

increases the potential return to the shareholders

Cash flow to creditors is defined as

interest paid minus net new borrowing

The market value of a firm's fixed assets:

is equal to the estimated current cash value of those assets

If a firm has a negative cash flow from assets every year for several years, the firm:

may be continually increasing in size.

Shareholders' equity is equal to:

net fixed assets minus long-term debt plus net working capital.

Cash flow from assets is defined as:

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

A balance sheet is a financial statement that

presents a snapshot of the firm's accounting values of assets, liabilities and equity

A negative cash flow to stockholders indicates a firm:

received more from selling stock than it paid out to shareholders.

An income statement prepared according to GAAP:

records expenses based on the matching principle.

An income statement is a financial statement that:

reports the firm's performance over a period of time

Delivery trucks are classified as:

tangible fixed assets

Operating cash flow is defined as:

the cash that a firm generates from its normal business activities.

The matching principle states that

the costs of producing an item should be recorded when the sale of that item is recorded as revenue.

The matching principle states that:

the costs of producing an item should be recorded when the sale of that item is recorded as revenue.

Net working capital is defined as the

the difference between a firm's current assets and its current liabilities