Exam 1 Flashcards
(35 cards)
Interest is a tax-deductible expense. This causes firms to have a preference for financing with:
a. bonds
b. preferred stock
c. retained earnings
d. common stock
bonds
Which of the following balance sheet items generally takes the longest time to convert to cash?
a. accounts receivable
b. accounts payable
c. inventory
d. treasury bills
Inventory
Which of the following would appear as a liability on a company’s balance sheet?
a. depreciation expense
b. notes payable
c. preferred stock
d. cost of goods sold
Notes payable
Which of the following would appear as part of equity on a company’s balance sheet?
a. accounts receivable
b. inventory
c. buildings
d. common stock
common stock
Finore Manufacturing has the following amounts on its 12/31/14 balance sheet.
Cash -> $150
Other current assets -> 397
Property, plant, & equipment, net of depreciation -> 538
Current liabilities -> 324
Total Liabilities -> 504
Which was Finore Manufacturing’s equity as on December 31, 2014?
$581
Which of the following is a tax-deductible expense for a corporation?
a. common stock dividends paid
b. preferred stock dividends paid
c. interest paid
d. loan principal paid
interest paid
Finore Manufacturing has the following amounts on its 12/31/14 balance sheet.
Cash -> $150
Other current assets -> 397
Property, plant, & equipment, net of depreciation -> 538
Current liabilities -> 324
Total Liabilities -> 504
What was Finore Manufacturing’s net working capital on December 31, 2014?
$223
According to the balance sheet identity, total assets must equal:
a. fixed assets plus total debt
b. total shareholders’ equity less current assets
c. total liabilities plus owners’ equity
d. current assets plus current liabilities
total liabilities plus owners’ equity
Which of the following is an example of current liabilities?
a. bank term loans
b. pension obligations
c. loss on sales of a fixed asset
d. accounts payable
accounts payable
The income statement is:
a. like a snapshot of a firm’s financial position at. particular point in time
b. a summary of a firm’s cash receipts and cash payments and investments for a period of time
c. a statement which identies the change in equity from one accounting period to the next
d. like a video recording of a firm’s revenues and expenses during a period of time
like a video recording of a firm’s revenues and expenses during a period of time
Treasury stock represents stock that:
a. is being held to purchase treasury securities
b. is being held to purchase preferred stock
c. a firm has sold to the U.S. Treasury Department
d. a firm has purchases back from investors
a firm has purchases back from investors
A commercial bank wants to determine if an applicant for a loan is likely to be able to pay its bills as they come due. Which type of ratio is most appropriate?
a. efficiency ratio
b. leverage ratio
c. liquidity ratio
d. profitability ratio
liquidity ratio
The most useful way to prepare a common size income statement is to express each amount item as a percentage of:
a. total equity
b. total debt
c. net sales
d. total assets
net sales
____ are defined as total sales less all sales discounts and sales returns and allowances
a. Gross cash sales
b. Credit sales
c. Net sales
d. Gross sales
Net sales
A common-size balance sheet presents the amounts in asset, liability, and owners’ equity accounts as a
a. percentage of total assets
b. percentage of total net cash flow
c. percentage of total net income
d. percentage of total sales
percentage of total assets
Which one of the following is an efficiency ratio?
a. days sales outstanding
b. current ratio
c. price-earnings ratio
d. debt-to-equity ratio
Days sales outstanding
Jet, Inc., has net sales of $326,352, accounts receivables of $98,765, and inventory of $72,989. What is the firm’s accounts receivables turnover?
3.3 times
If Kalium Motors has an EBIT of $28 million, interest of $8 million and is taxed at an average rate of 32 %, what is its net income?
$13.6 million
The conventional way of preparing a balance sheet is to list all assets in the order of their:
a. market value
b. historical cost
c. liquidity
d. risk
liquidity
Petra, Inc., has $400,000 as current assets, $1.224 million as plant and equipment, and $250,000 as goodwill. In preparing the balance sheet, these assets should be listed in which of the following orders?
a. current assets, goodwill, and plant and equipment
b. current assets, plant and equipment, goodwill
c. Goodwill is not an asset and is not listed here
None of the above
current assets, plant and equipment, goodwill
Shane, Inc., has completed its fiscal year and reported Total Assets of $1,000,000 and Total Liabilities of $300,000. Calculate the value of common equity
$700,000
Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marketable securities worth $335,485, accounts payables worth $1,159,357, inventory of $1,651,599, accounts receivables of $1,488,121, short-term notes payable worth $313,663, and other current assets of $121,427. What is the company’s net working capital?
$2,123,612
Tre-Bien Bakeries generated net income of $233,412 this year. At the end, the company had accounts receivables of $47,199, inventory of $63,781, and cash of $21,461. It also had accounts payables of $51,369, short-term notes payables of $11,417, and accrued taxes of $6,145. The net working capital of the firm is:
$63,655
Centennial Brewery produced revenues of $1,145,227 in 2008. It has expense (excluding depreciation) of $812,640, depreciation of $131,335, and interest expense of $81,112. It pays an average tax rate of 34 percent. What is the firm’s net incomes after taxes? Round your final answer to the nearest dollar?
$79,292
