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Exam 2: Financial Statements,Taxes,and Cash Flow

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Question 41

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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 _____.

A) $4,600,000; $3,900,000
B) $4,600,000; $3,125,000
C) $5,000,000; $3,125,000
D) $5,000,000; $3,900,000
E) $6,500,000; $3,900,000

F) C) and E)
G) D) and E)

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Question 42

Multiple Choice

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Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

A) income statement
B) creditor's statement
C) balance sheet
D) statement of cash flows
E) dividend statement

F) D) and E)
G) C) and E)

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Question 43

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The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940.The 2011 balance sheet showed current assets of $1,640 and current liabilities of $1,140.What was the change in net working capital for 2011?

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

Boyer Enterprises had $200,000 in 2011 taxable income.What is the firm's average tax rate based on the rates shown in the following table? $\begin{array} { l c } \text { Taxable income } & \text { Tax rate } \\\$ 0 - 50,000 & 15 \% \\50,001 - 75,000 & 25 \% \\75,001 - 100,000 & 34 \% \\101,000 - 335,000 & 39 \%\end{array}$

Cash flow from assets is also known as the firm's:

Cash flow to stockholders is defined as:

Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411.During the year,assets with a combined book value of $6,943 were sold.Depreciation for the year was $42,822.What is the amount of net capital spending?

Which one of the following statements concerning net working capital is correct?

During 2011,RIT Corp.had sales of $565,600.Costs of goods sold,administrative and selling expenses,and depreciation expenses were $476,000,$58,800,and $58,800,respectively.In addition,the company had an interest expense of $112,000 and a tax rate of 32 percent.What is the operating cash flow for 2009? Ignore any tax loss carry-back or carry-forward provisions.

Which one of the following will increase the cash flow from assets,all else equal?

Which one of the following costs is most apt to be a fixed cost?

Four years ago,Velvet Purses purchased a mailing machine at a cost of $176,000.This equipment is currently valued at $64,500 on today's balance sheet but could actually be sold for $58,900.This is the only fixed asset the firm owns.Net working capital is $57,200 and long-term debt is $111,300.What is the book value of shareholders' equity?

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Which one of the following statements related to the cash flow to creditors is correct?

The Daily News had net income of $121,600 of which 40 percent was distributed to the shareholders as dividends.During the year,the company sold $75,000 worth of common stock.What is the cash flow to stockholders?

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?

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?

Net working capital is defined as:

Webster World has sales of $12,900,costs of $5,800,depreciation expense of $1,100,and interest expense of $700.What is the operating cash flow if the tax rate is 32 percent?