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Exam 2: Financial Statements,Taxes,and Cash Flow

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Question 21

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Net income increases when:

A) fixed costs increase.
B) depreciation increases.
C) the average tax rate increases.
D) revenue increases.
E) dividends cease.

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Question 22

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Production equipment is classified as:

A) a net working capital item.
B) a current liability.
C) a current asset.
D) a tangible fixed asset.
E) an intangible fixed asset.

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Question 23

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Use the following tax table to answer this question: $\quad$$\quad$$\text { Taxable Income}$ $\quad$$\text { Tax Rate}$ $\begin{array}{|r|r|c|}\hline \$ 0- & 50,000 & 15 \% \\\hline 50,001- & 75,000 & 25 \\\hline 75,001- & 100,000 & 34 \\\hline 100,001- & 335,000 & 39 \\\hline 335,001- & 10,000,000 & 34 \\\hline\end{array}$ Comfy Inn earned $218,310 in taxable income for the year.How much tax does the company owe?

Market values:

Cash flow to stockholders is defined as:

For the past year,LP Gas,Inc.,had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders.The interest paid was $2,300.What is the amount of the net new borrowing?

ANC Plastics has net working capital of $15,400,current assets of $39,200,equity of $46,600,and long-term debt of $22,100.What is the amount of the net fixed assets?

Bleu Berri Farms had equity of $58,900 at the beginning of the year.During the year,the company earned net income of $8,200 and paid $2,500 in dividends.Also during the year,the company repurchased $3,500 of stock from one of its shareholders.What is the value of the owners' equity at year end?

Assume a company has sales of $423,800,production costs of $297,400,other expenses of $18,500,depreciation expense of $36,300,interest expense of $2,100,taxes of $23,600,and dividends of $12,000.In addition,you're told that during the year the firm issued $4,500 in new equity and redeemed $6,500 in outstanding long-term debt.If net fixed assets increased by $7,400 during the year,what was the addition to net working capital?

Which one of the following has nearly the same meaning as free cash flow?

Net working capital includes:  

Highly liquid assets:

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?

Cornerstone Markets has beginning long-term debt of $64,500,which is the principal balance of a loan payable to Centre Bank.During the year,the company paid a total of $16,300 to the bank,including $4,100 of interest.The company also borrowed $11,000.What is the value of the ending long-term debt?

Donner United has total owners' equity of $18,800.The firm has current assets of $23,100,current liabilities of $12,200,and total assets of $36,400.What is the value of the long-term debt?

Rusty Antiques has a marginal tax rate of 39percent and an average tax rate of 26.9 percent.If the firm owes $37,265 in taxes,how much taxable income did it earn?

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

Leslie Printing has net income of $26,310 for the year.At the beginning of the year,the firm had common stock of $55,000,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 paid dividends of $32,500.What is the amount of the net new equity raised during the year?

Neiger Flours owes $16,929 in taxes on taxable income of $61,509.If the firm earns $100 more in income,it will owe an additional $48 in taxes.What is the average tax rate on income of $61,609?

The market value of a firm's fixed assets: