FINC 3610 Final ExamWhich of the following is true of sole proprietorships and corporations?

Penguin Pucks, Inc., has current assets of $3,400, net fixed assets of $18,500, current liabilities of $2,900, and long-term debt of $7,700. How much is net working capital? Hint: NWC = CA − CL. • -$8,200 • $8,200 • $7,200 • $500 • -$500

NWC = CA - CL NWC = 3,400 - 2,900 = $500

Jetson Spacecraft Corp. shows the following information on its 2019 income statement: sales = $214,000; costs = $91,000; other expenses = $6,100; depreciation expense = $9,100; interest expense = $13,300; taxes = $37,800; dividends = $10,100. In addition, you're told that the firm issued $7,900 in new equity during 2019 and redeemed $9,500 in outstanding long-term debt. What is the 2019 operating cash flow? Hint: OCF = EBIT + Depreciation - Taxes. • $107,800 • $79,100 • $116,900 • $94,500 • $56,700

OCF = EBIT + depreciation - taxes Income statement: Sales: $214,000 Cost of goods sold: (91,000) Expenses: (6,100) Depreciation: (9,100) Interest: (13,300) = EBIT: 94,500 OCF = 94,500 + 9,100 - 37,800

A ________ is responsible for evaluating and recommending proposed long-term investments. - capital expenditures manager - financial analyst - pension fund manager - credit manager

capital expenditures manager

Under which of the following legal forms of organization is ownership readily transferable? - corporations - sole proprietorships - partnerships - limited partnerships

corporations

Which of the following legal forms of organization is most expensive to organize? - limited partnerships - corporations - partnerships - sole proprietorships

corporations

A major weakness of a partnership is ________. - the difficulty in maintaining owners' control - its high organizational costs - the difficulty in liquidating or transferring ownership - the double taxation of income

the difficulty in liquidating or transferring ownership

Gia, Inc., has sales of $473,000, costs of $275,000, depreciation expense of $42,000, interest expense of $23,000, and a tax rate of 21 percent. (Do not round intermediate calculations.) What is the net income for the firm? Hint: Build the income statement.

105,070

T/F: A capital expenditures analyst/manager is responsible for the evaluation and recommendation of proposed asset investments.

True

T/F: A controller typically handles the accounting activities, such as tax management, data processing, financial accounting, and cost accounting.

True

Which of the following legal forms of organization has the ease of dissolution? - limited partnerships - corporations - partnerships - sole proprietorships

sole proprietorships

Jetson Spacecraft Corp. shows the following information on its 2019 income statement: sales = $214,000; costs = $91,000; other expenses = $6,100; depreciation expense = $9,100; interest expense = $13,300; taxes = $37,800; dividends = $10,100. In addition, you're told that the firm issued $7,900 in new equity during 2009 and redeemed $9,500 in outstanding long-term debt. What is the 2019 cash flow to creditors? Hint: CFC = Interest - Net new LTD • $7,900 • $22,800 • $7,000 • $9,500 • $13,300

CFC = Interest - net new LTD CFC = 13,300 + 9,500????? = 22,800

Which one of the following is a capital budgeting decision? - Deciding how to refinance a debt issue that is maturing. - Deciding whether or not to purchase a new machine for the production line. - Determining how much inventory to keep on hand. - Determining how much money should be kept in the checking account. - Determining how many shares of stock to issue.

Deciding whether or not to purchase a new machine for the production line.

Which one of the following is a capital structure decision? - Determining how to allocate investment funds to multiple projects. - Determining how much inventory will be needed to support a project. - Determining how much debt should be assumed to fund a project. - Determining which one of two projects to accept.Determining the amount of funds needed to finance customer purchases of a new product.

Determining how much debt should be assumed to fund a project.

Which of the following is true of sole proprietorships and corporations? - It is difficult to transfer ownership of corporations compared to that of sole proprietorships. - Both sole proprietorships and corporations are equally scrutinized and regulated by government bodies. - Income from both forms of organizations are taxed only at the corporate level. - In sole proprietorships, owners have unlimited liability; whereas, in corporations, owners have limited liability.

In sole proprietorships, owners have unlimited liability; whereas, in corporations, owners have limited liability.

During the year, the Senbet Discount Tire Company had gross sales of $865,000. The firm's cost of goods sold and selling expenses were $455,000 and $210,000, respectively. The company also had notes payable of $680,000. These notes carried an interest rate of 4 percent. Depreciation was $105,000. The tax rate was 21 percent. What was the company's net income? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) Hint: Build the income statement. The interest expense for the company is the amount of debt times the interest rate on the debt.

Income statement: Sales: $865,000 Cost of goods sold: (455,000) Selling costs: (210,000) Depreciation: (105,000) = EBIT: 95,000 Interest: (27,200) = Taxable income: 67,800 Taxes (21%): (14,238) = Net income: 53,562

Alesha, Inc., has current assets of $4,300, net fixed assets of $24,000, current liabilities of $2,900, and long-term debt of $10,700.(Do not round intermediate calculations.) How much is net working capital? Hint: Total assets = Current assets + Net fixed assets = Current liabilities + Long-term debt + Owners' equity Net working capital = Current assets − Current liabilities

NWC = CA - CL NWC = 4,300 - 2,900 = 1,400