公司理财ch2

(2) 1. _____ refers to the cash flow that results from the firm's ongoing, normalbusiness activities.Net working capitalCash flow to creditorsCash flow from operating activitiesCash flow from assetsCapital spending(2) 2. Which of the following are included in current assets?I. equipmentII. InventoryIII. accounts payableIV. cashII and IV onlyIII and IV onlyII, III, and IV onlyI and III onlyI, II, and IV only(2) 3. When making financial decisions related to assets, you should:place more emphasis on book values than on market values.always consider market values.place primary emphasis on historical costs.only consider market values if they are less than book values.rely primarily on the value of assets as shown on the balancesheet.(2) 4. Your _____ tax rate is the amount of tax payable on the next taxabledollar you earn.residualmarginaldeductibletotalaverage(0) 5.What is the cash flow to creditors for 2011?-$35$205$170$135-$170Cash flow to creditors = $35 - ($410 - $340) = -$35(2) 6. _____ refers to the changes in net capital assets.Cash flow from assetsNet working capitalCash flow to creditorsOperating cash flowCash flow from investing(0) 7. One of the reasons why cash flow analysis is popular is because:cash flows are hard to understand.it is easy to manipulate, or spin the cash flows.None of these.it is difficult to manipulate, or spin the cash flows.cash flows are more subjective than net income.(0) 8. Martha's Enterprises spent $2,500 to purchase equipment three years ago.This equipment is currently valued at $2,000 on today's balance sheet butcould actually be sold for $2,200. Net working capital is $300 and long-term debt is $900. Assuming the equipment is the firm's only fixed asset,what is the book value of shareholders' equity?$1,400$1,600The answer cannot be determined from the informationprovided$1,900$1,100Book value of shareholders' equity = $2,000 + $300 - $900 = $1,400(2) 9. _____ is calculated by adding back noncash expenses to net income andadjusting for changes in current assets and liabilities.Operating cash flowCash flow from operationsCash flow to creditorsNet working capitalCapital spending(2) 10. Your _____ tax rate is the total taxes you pay divided by your taxableincome.residualdeductibletotalaveragemarginal(2) 11.What is net capital spending for 2011?$57$0-$57$477-$250Net capital spending = $1,413 - $1,680 + $210 = -$57(2)12. A(n) ____ asset is one which can be quickly converted into cash without significant loss in value.currentliquidfixedlong-termintangible(0)13. An increase in total assets: can only occur when a firm has positive net income.means that net working capital is also increasing.requires an investment in fixed assets.→ must be offset by an equal increase in liabilities and shareholders' equity.means that shareholders' equity must also increase.(2)14. The financial statement showing a firm's accounting value on a particular date is the:statement of cash flows.shareholders' equity sheet.income statement.tax reconciliation statement.balance sheet.(2) 15. Noncash items refer to:the accounts payable of a firm.the credit sales of a firm.all accounts on the balance sheet other than cash on hand.expenses charged against revenues that do not directly affectcash flow.the costs incurred for the purchase of intangible fixed assets.(2) 16. _____ refers to the firm's interest payments less any net new borrowing.Capital spendingCash flow to creditorsNet working capitalCash flow from shareholdersOperating cash flow(2)17.What is the cash flow of the firm for 2011?$3,100$485$1,340$2,590$430Operating cash flow = $1,930 + $1,370 - $455 = $2,845; Change in net working capital = ($7,310 - $2,570) - ($6,225 - $2,820) = $1,335; Net capital spending = $10,670 - $10,960 + $1,370 = $1,080; Cash flow of the firm = $2,845 - $1,335 - $1,080 = $430(2) 18. Which one of the following assets is generally the most liquid?buildingspatentsequipmentinventoryaccounts receivable(2) 19. As seen on an income statement:interest expense is added to earnings before interest and taxesto get pretax income.the tax rate is applied to the earnings before interest and taxeswhen the firm has both depreciation and interest expenses.interest is deducted from income and increases the total taxesincurred.depreciation is shown as an expense but does not affect thetaxes payable.depreciation reduces both the pretax income and the netincome.(2) 20. The financial statement summarizing a firm's accounting performanceover a period of time is the:statement of cash flows.tax reconciliation statement.balance sheet.shareholders' equity sheet.income statement.(2) 21. Which of the following accounts are included in shareholders' equity?I. interest paidII. retained earningsIII. capital surplusIV. long-term debtII and III onlyI and III onlyI and II onlyI and IV onlyII and IV only(2) 22. An increase in which one of the following will cause the operating cashflow to increase?taxescostschanges in the amount of net fixed capitaldepreciationnet working capital(2) 23. A current asset is:an item currently owned by the firm.the market value of all items currently owned by the firm.an item that the firm expects to own within the next year.the amount of cash on hand the firm currently shows on itsbalance sheet.an item currently owned by the firm that will convert to cashwithin the next 12 months.(2) 24. Awnings Incorporated has beginning net fixed assets of $560 and endingnet fixed assets of $720. Assets valued at $210 were sold during the year.Depreciation was $50. What is the amount of capital spending?$210$110$420$300$160Net capital spending = $720 - $560 + $50 = $210(2) 25. A firm starts its year with a positive net working capital. During the year,the firm acquires more short-term debt than it does short-term assets. Thismeans that:accounts payable increased and inventory decreased during theyear.both accounts receivable and inventory decreased during theyear.the ending net working capital can be positive, negative, orequal to zero.the beginning current assets were less than the beginningcurrent liabilities.the ending net working capital will be negative.(0) 26. At the beginning of the year, long-term debt of a firm is $310 and totaldebt is $350. At the end of the year, long-term debt is $280 and total debtis $370. The interest paid is $50. What is the amount of the cash flow tocreditors?-$30$80$0$30$20Cash flow to creditors = $50 - ($280 - $310) = $80(2) 27. Dividends per share is equal to dividends paid:multiplied by the par value of the common stock.divided by total shareholders' equity.multiplied by the total number of shares outstanding.divided by the par value of common stock.divided by the total number of shares outstanding.(0) 28. Thompson's Jet Skis has operating cash flow of $218. Depreciation is $45and interest paid is $35. A net total of $69 was paid on long-term debt.The firm spent $180 on fixed assets and increased net working capital by$38. What is the amount of the cash flow to stockholders?-$104$142$114-$28$28Cash flow of the firm = $218 - $38 - $180 = $0; Cash flow to creditors =$35 - (-$69) = $104; Cash flow to stockholders = $0 - $104 = -$104 (2) 29. Debt is a contractual obligation that:allows the bondholders to sue the firm if it defaults.Both requires a repayment of a stated amount and interest overthe period; and allows the bondholders to sue the firm if itdefaults.Both requires the payout of residual flows to the holders ofthese instruments; and requires a repayment of a stated amountand interest over the period.requires the payout of residual flows to the holders of theseinstruments.requires a repayment of a stated amount and interest over theperiod.(0) 30. Book value:is adjusted to market value whenever the market value exceedsthe stated book value.generally tends to exceed market value when fixed assets areincluded.is more of a financial than an accounting valuation.is equivalent to market value for firms with fixed assets.→ is based on historical cost.(2)31. Which of the following are included in current liabilities?I. Note payable to a supplier in eighteen monthsII. Debt payable to a mortgage company in nine monthsIII. Accounts payable to suppliersIV. Loan payable to the bank in fourteen monthsI and III onlyI, II, and III onlyII, III, and IV onlyII and III onlyIII and IV only(2)32. The carrying value or book value of assets: is always the best measure of the company's value to aninvestor.is always higher than the replacement cost of the assets.is determined under GAAP and is based on the cost of theasset.represents the true market value according to GAAP.None of these.(2)33. Net working capital is defined as: current assets minus current liabilities.total assets minus total liabilities.current liabilities minus shareholders' equity.total liabilities minus shareholders' equity.fixed assets minus long-term liabilities.(2) 34. Mart's Boutique has sales of $670,000 and costs of $460,000. Interestexpense is $50,000 and depreciation is $55,000. The tax rate is 34%. Whatis the net income?$69,300$138,600$35,700$105,000$210,000Taxable income = $670,000 - $460,000 - $50,000 - $55,000 = $105,000;Tax = .34($105,000) = $35,700; Net income = $105,000 - $35,700 =$69,300(0) 35.What is the taxable income for 2011?$800$780$360$640Net income = $160 + $360 = $520; Taxable income = $520 ÷ (1 - .35) =$800(2) 36. Which of the following statements concerning the income statement istrue?It measures performance over a specific period of time.It includes deferred taxes.It treats interest as an expense.It determines after-tax income of the firm.All of these.(2) 37. The cash flow of the firm must be equal to:None of these.cash flow to stockholders minus cash flow to debtholders.cash flow to governments plus cash flow to stockholders.cash flow to debtholders minus cash flow to stockholders.cash flow to stockholders plus cash flow to debtholders.(2) 38.What are the sales for 2011?$4,600$4,815$4,385$5,000Sales = $1,015 + $375 + $3,210 = $4,600(2)39. _____ refers to the firm's dividend payments less any net new equity raised.Net working capitalOperating cash flowCash flow from creditorsCash flow to stockholdersCapital spending(2)40.What is the amount of net new borrowing for 2011?$25-$25$225$0-$225Net new borrowing = $8,100 - $7,875 = $225 (2) 41.What is the operating cash flow for 2011?$800$1,015$1,110$1,390$520Earnings before interest and taxes = $800 + $215 = $1,015; Operatingcash flow = $1,015 + $375 - ($800 - $520) = $1,110(2) 42. Brad's Company has equipment with a book value of $500 that could besold today at a 50% discount. Its inventory is valued at $450 and could besold to a competitor for that amount. The firm has $100 in cash andcustomers owe it $250. What is the accounting value of its liquid assets?$550$1,050$800$100$1,300Liquid assets = $450 + $100 + $250 = $800(2) 43.What is the net working capital for 2011?$345$1,005$405$805$812Net working capital = $75 + $502 + $640 - $405 = $812(2) 44. Which of the following are all components of the statement of cash flows?Cash flow from operating activities, cash flow from investingactivities, and cash flow from divesting activitiesNone of these.Cash flow from operating activities, cash flow from investingactivities, and cash flow from financing activitiesCash flow from brokering activities, cash flow from profitableactivities, and cash flow from non-profitable activitiesCash flow from internal activities, cash flow from externalactivities, and cash flow from financing activities(2) 45.What is the operating cash flow for 2011?$367$353$297$143$325Earnings before interest and taxes = $785 - $460 - $210 = $115; Taxableincome = $115 - $35 = $80; Taxes = .35($80) = $28; Operating cash flow= $115 + $210 - $28 = $297(2) 46. Your firm has net income of $198 on total sales of $1,200. Costs are $715and depreciation is $145. The tax rate is 34%. The firm does not haveinterest expenses. What is the operating cash flow?$241$383$485$93$340Earnings before interest and taxes = $1,200 - $715 - $145 = $340; Tax =[$198 ÷ (1 - .34)] - $198 = $102; Operating cash flow = $340 + $145 -$102 = $383(2) 47. Calculate net income based on the following information. Sales are $250,cost of goods sold is $160, depreciation expense is $35, interest paid is$20, and the tax rate is 34%.$11.90$35.00$36.30$46.20$23.10((Sales - COGS) - Depreciation - Interest) - Taxes = Net Income (($250 -$160) - $35 - $20) - $11.9 = $23.10(2) 48. Which one of the following statements concerning liquidity is correct?Trademarks and patents are highly liquid.If you sold an asset today, it was a liquid asset.Balance sheet accounts are listed in order of decreasingliquidity.The less liquidity a firm has, the lower the probability the firmwill encounter financial difficulties.If you can sell an asset next year at a price equal to its actualvalue, the asset is highly liquid.。