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Exam 2: Financial Statements, Taxes, and Cash Flowpart Two: Financial Statements and Long-Term Financial Planning

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Question 31

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Which of the following are included in current liabilities? I.note payable to a supplier in eight months II.amount due from a customer next month III.account payable to a supplier that is due next week IV.loan payable to the bank in fourteen months

A) I and III only
B) II and III only
C) I,II,and III only
D) I,III,and IV only
E) I,II,III,and IV

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Question 32

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The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.

A) mean
B) residual
C) total
D) average
E) marginal

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Question 33

Multiple Choice

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As of 2012,which one of the following statements concerning corporate income taxes is correct?

Your firm has total assets of $4,900,fixed assets of $3,200,long-term debt of $2,900,and short-term debt of $1,400.What is the amount of net working capital?

A firm has common stock of $6,200,paid-in surplus of $9,100,total liabilities of $8,400,current assets of $5,900,and fixed assets of $21,200.What is the amount of the shareholders' equity?

Which one of the following is true according to Generally Accepted Accounting Principles?

Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense.The addition to retained earnings is $418 and net new equity is $500.The tax rate is 35 percent.Sales are $15,900 and depreciation is $680.What are the earnings before interest and taxes?

The _____ tax rate is equal to total taxes divided by total taxable income.

Which one of the following statements related to taxes is correct?

Jake owns The Corner Market which he is trying to sell so that he can retire and travel.The Corner Market owns the building in which it is located.This building was built at a cost of $647,000 and is currently appraised at $819,000.The counters and fixtures originally cost $148,000 and are currently valued at $65,000.The inventory is valued on the balance sheet at $319,000 and has a retail market value equal to 1.2 times its cost.Jake expects the store to collect 98 percent of the $21,700 in accounts receivable.The firm has $26,800 in cash and has total debt of $414,700.What is the market value of this firm?

Which of the following are expenses for accounting purposes but are not operating cash flows for financial purposes? I.interest expense II.taxes III.costs of goods sold IV.depreciation

As long as a firm maintains a positive cash balance,why is it essential to review the firm's cash flows?

The Widget Co.purchased new machinery three years ago for $4 million.The machinery can be sold to the Roman Co.today for $2 million.The Widget Co.'s current balance sheet shows net fixed assets of $2,500,000,current liabilities of $1,375,000,and net working capital of $725,000.If all the current assets were liquidated today,the company would receive $1.9 million in cash.The book value of the Widget Co.'s assets today is _____ and the market value of those assets is _____.

Winston Industries had sales of $843,800 and costs of $609,900.The firm paid $38,200 in interest and $18,000 in dividends.It also increased retained earnings by $62,138 for the year.The depreciation was $76,400.What is the average tax rate?

You recently purchased a grocery store.At the time of the purchase,the store's market value equaled its book value.The purchase included the building,the fixtures,and the inventory.Which one of the following is most apt to cause the market value of this store to be lower than the book value?

The managers of a firm wish to expand the firm's operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised.The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm.Write a short response to this request.

A firm has net working capital of $640.Long-term debt is $4,180,total assets are $6,230,and fixed assets are $3,910.What is the amount of the total liabilities?

Crandall Oil has total sales of $1,349,800 and costs of $903,500.Depreciation is $42,700 and the tax rate is 34 percent.The firm does not have any interest expense.What is the operating cash flow?

Bonner Collision has shareholders' equity of $141,800.The firm owes a total of $126,000 of which 60 percent is payable within the next year.The firm net fixed assets of $161,900.What is the amount of the net working capital?

Which term relates to the cash flow which results from a firm's ongoing,normal business activities?