CHAPTER 2

Question 1

CA

Answer 1

CURRENT ASSETS

Question 2

CFA

Answer 2

CASH FLOW FROM ASSETS

Question 3

CFC

Answer 3

CASH FLOW TO CREDITORS

Question 4

CFS

Answer 4

CASH FLOW TO STOCKHOLDERS

Question 5

CL

Answer 5

CURRENT LIABILITIES

Question 6

COGS

Answer 6

COST OF GOODS SOLD

Question 7

EBIT

Answer 7

EARNINGS BEFORE INTEREST AND TAXES

Question 8

LTD

Answer 8

LONG TERM DEBT

Question 9

m

Answer 9

MILLIONS

Question 10

NCS

Answer 10

NET CAPITAL SPENDING

Question 11

NFA

Answer 11

NET FIXED ASSETS

Question 12

NWC

Answer 12

NET WORKING CAPITAL

Question 13

OCF

Answer 13

OPERATING CASH FLOW

Question 14

FORMULA FOR CA

Answer 14

CASH + A/R + INVENTORY

Question 15

FORMULA FOR CFA

Answer 15

OCF - NCS - CHANGE NWC OR CFA + CFS

Question 16

FORMULA FOR CFC

Answer 16

INT PAID - NET NEW BORROWING

Question 17

FORMULA FOR NET NEW BORROWING

Answer 17

ENDING BALANCE LTD - BEG BALANCE LTD

Question 18

POSITIVE CFC EXISTS

Answer 18

PAID MORE DEBT THAN BORROWED

Question 19

NEGATIVE CFC EXISTS

Answer 19

BORROWED MORE THAN DEBT PAID

Question 20

FORMULA FOR CFS

Answer 20

DIVIDENDS PAID - NET NEW EQUITY

Question 21

FORMULA FOR NET NEW EQUITY

Answer 21

COMMON STOCK END BALANCE + COMMON STOCK PAID IN SURPLUS END BALANCE - COMMON STOCK BEGIN BALANCE - COMMON STOCK PAID IN SURPLUS BEG BALANCE

Question 22

POSITIVE CFS MEANS

Answer 22

NET CASH FLOW FROM COMPANY TO STOCKHOLDERS (BOUGHT STOCK BACK)

Question 23

NEGATIVE CFS MEANS

Answer 23

NET CASH FLOW FROM STOCKHOLDERS TO COMPANY (SOLD STOCK)

Question 24

FORMULA FOR CL

Answer 24

A/P PLUS NOTES PAYABLE

Question 25

FORMULA FOR COGS

Answer 25

NET SALES - DEPRECIATION - EBIT

Question 26

FORMULA FOR EBIT

Answer 26

TAXABLE INCOME + INTEREST PAID

Question 27

FORMULA FOR LTD

Answer 27

TOTAL LIABILITIES - CL

Question 28

LONG TERM DEBT CONSISTS OF

Answer 28

MORTGAGE, EQUIP LOANS

Question 29

LONG TERM DEBT TIME PERIOD

Answer 29

DEBT DUE IN MORE THAN 1 YEAR

Question 30

SHORT TERM DEBT CONSISTS OF

Answer 30

ACCOUNTS PAYABLE + NOTES PAYABLE

Question 31

SHORT TERM DEBT TIMELINE

Answer 31

LESS THAN 1 YEAR

Question 32

FORMULA FOR NCS

Answer 32

ENDING NFA - BEGIN NFA + DEPRECIATION

Question 33

NFA CONSISTS OF

Answer 33

BUILDING + EQUIPMENT

Question 34

FORMULA FOR NFA

Answer 34

TOTAL ASSETS LESS CA

Question 35

FORMULA FOR ENDING NFA

Answer 35

BEGIN NFA - DEPRECIATION + NCS

Question 36

FORMULA FOR NWC

Answer 36

CA LESS CL

Question 37

FORMULA FOR OCF

Answer 37

EBIT + DEPRECIATION - TOTAL TAXES

Question 38

FORMULA FOR EARNINGS PER SHARE

Answer 38

NET INCOME ______________ TOTAL SHARES OUTSTANDING

Question 39

FORMULA FOR DIVIDENDS PAID

Answer 39

NET INCOME LESS ADDITIONAL RETAINED EARNINGS

Question 40

FORMULA FOR DIVIDENDS PER SHARE

Answer 40

DIVIDENDS PAID ____________________________ TOTAL SHARES OUTSTANDING

Question 41

WHAT IS MARGINAL TAX RATE

Answer 41

THE TAX RATE THAT APPLIES TO THE NEXT DOLLAR OF TAXABLE INCOME EARNED

Question 42

FORMULA FOR SHAREHOLDERS EQUITY

Answer 42

TOTAL ASSETS LESS TOTAL LIABILILITIES

Question 43

FORMULA FOR NET INCOME

Answer 43

DIVIDENDS PLUS ADDITIONAL RETAINED EARNINGS

Question 44

FORMULA FOR TAXABLE INCOME

Answer 44

NET INCOME _________________________________ (1 - TAX RATE)

Question 45

FORMULA FOR TOTAL TAXES

Answer 45

TAXABLE INCOME LESS NET INCOME