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Exam 2: Financial Statements, Taxes, and Cash Flow

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Question 21

Multiple Choice

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

A) capital structure.
B) equity structure.
C) hidden cash flow.
D) free cash flow.
E) historical cash flow.

F) A) and E)
G) All of the above

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Question 22

Multiple Choice

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The cash flow that is available for distribution to a corporation's creditors and stockholders is called the:

A) operating cash flow.
B) net capital spending.
C) net working capital.
D) cash flow from assets.
E) cash flow to stockholders.

F) A) and C)
G) None of the above

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Question 23

Multiple Choice

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The Daily News has projected annual net income of $272,600, of which 28 percent will be distributed as dividends. Assume the company will have net sales of  $75,000 worth of common stock. What will be the cash flow to stockholders if the tax rate is 21 percent?

The cash flow related to interest payments less any net new borrowing is called the:

Nu Furniture has sales of $241,000, depreciation of $32,200, interest expense of $35,700, costs of $103,400, and taxes of $14,637. What is the operating cash flow for the year?

BK Enterprises neither sold nor repurchased any shares of stock during the year. The firm had annual sales of $7,202, depreciation of $1,196, cost of goods sold of $4,509, interest expense of $318, taxes of $248, beginning-of-year shareholders' equity of $4,808, and end-of-year shareholders' equity of $4,922. What is the amount of dividends paid during the year?

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

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

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

The Beach Shoppe has beginning total debt of $682,400 and ending total debt of $697,413. Current liabilities increased by $18,915 during the year. What was the cash flow to creditors if the firm paid $34,215 in interest during the year?

The Lakeside Inn had operating cash flow of $48,450. Depreciation was $6,700 and interest paid was $2,480. A net total of $2,620 was paid on long-term debt. The firm spent $24,000 on fixed assets and decreased net working capital by $1,330. What was the amount of the cash flow to stockholders?

For 2017, Nevada Mining had projected taxable income of $94,800. Its actual taxable income exceeded this projection by $21,000. How much additional tax did the firm owe due to the $21,000 increase in taxable income? $\begin{array}{c}\begin{array}{c}\text { Taxable Income }\\\begin{array}{lll}\$0&\text { - } &50,000 \\50,001 &\text { - } &75,000 \\75,001&\text { - } &100,000 \\100,001&\text { - } &335,000 \\\end{array}\end{array}\begin{array}{c}\text { Tax Rate}\\15 \% \\25 \\34 \\39\end{array}\end{array}$

Andre's Bakery has sales of $487,000 with costs of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income?

During the year, RIT Corp. had sales of $565,600. Costs of goods sold, administrative and selling expenses, and depreciation expenses were $476,000, $58,800, and $42,800, respectively. In addition, the company had an interest expense of $112,000 and a tax rate of 22 percent. What is the operating cash flow for the year? Ignore any tax loss carry-forward provisions.

Which one of the following represents the most liquid asset?

Which one of the following is true according to generally accepted accounting principles?

Global Tours has beginning current assets of $1,360, beginning current liabilities of $940, ending current assets of $1,720, and ending current liabilities of $1,080. What is the change in net working capital?

Winston Industries had sales of $843,800 and costs of $609,900. The company paid $38,200 in interest and $35,000 in dividends. The depreciation was $76,400. The firm has a combined tax rate of 24 percent. What was the addition to retained earnings for the year?

The Widget Co. purchased all of its fixed assets three years ago for $4 million. These assets can be sold today for $2 million. The 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 total assets today is ________ and the market value of those assets is ________.

Galaxy Interiors income statement shows depreciation of $1,611, sales of $21,415, interest paid of $1,282, net income of $1,374, and costs of goods sold of $16,408. What is the amount of the noncash expenses?