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Question(s) / Instruction(s):

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?

a)      -$2,800

b)      $2,100

c)       $2,800

d)      $1,400

e)      -$1,400

 

12.

 

Net working capital is defined as:

a)      Available cash minus current liabilities.

b)      The depreciated book value of a firm's fixed assets.

c)       Current assets minus current liabilities.

d)      Total assets minus total liabilities.

e)      The value of a firm's current assets.

 

 

13.

Financial leverage:

a)      Is inversely related to the level of debt.

b)      Increases as the net working capital increases.

c)       Increases the potential return to the shareholders.

d)      Is the ratio of a firm's revenues to its fixed expenses?

e)      Is equal to the market value of a firm divided by the firm's book value.

 

 

14.

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?

a)      $32,055

b)      $22,695

c)       $20,445

d)      $27,375

e)      $35,255

15.

 

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?

a)      $211,600

b)      $231,500

c)       $161,800

d)      -$88,200

e)      -$51,400

16.

An income statement prepared according to GAAP:

a)      Reflects the net cash flows of a firm over a stated period of time.

b)      Reflects the financial position of a firm as of a particular date.

c)       Distinguishes variable costs from fixed costs.

d)      Records revenue when payment for a sale is received.

e)      Records expenses based on the matching principle.

.

17.

 

Which one of the following is the tax rate that applies to the next dollar of taxable income that a firm earns?

a)      contingent tax rate

b)      variable tax rate

c)       average tax rate

d)      marginal tax rate

e)      absolute tax rate

 

18.

The Import Store has cash of $34,600 and accounts receivable of $54,200. The inventory cost $92,300 and can be sold today for $146,900. The fixed assets were purchased at a cost of $234,500 of which $87,900 has been depreciated. The fixed assets can be sold today for $199,000. What is the total book value of the firm's assets?

a)      $382,300

b)      $327,700

c)       $309,900

d)      $346,800

e)      $434,700

 

19.

At the beginning of the year, long-term debt of a firm is $298 and total debt is $334. At the end of the year, long-term debt is $264 and total debt is $344. The interest paid is $30. What is the amount of the cash flow to creditors?

a)      $30

b)      –$64

c)       –$34

d)      $64

e)      $34

 

20.

During the year, The Dalton Firm had sales of $3,210,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $2,540,000, $389,000, and $112,000, respectively. In addition, the company had an interest expense of $118,000 and a tax rate of 34 percent. (Ignore any tax loss carryback or carryforward provisions. What is its operating cash flow?

a)      $271,420

b)      $287,700

c)       $273,330

d)      $263,660

e)      $285,400

 

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