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Exam 2: Financial Statements,Taxes,and Cash Flow

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Question 41

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Over the past year,a firm decreased its current assets and increased its current liabilities.As a result,the firm's net working capital:

A) had to increase.
B) had to decrease.
C) remained constant.
D) could have either increased, decreased, or remained constant.
E) was unaffected as the changes occurred in the firm's current accounts.

F) C) and E)
G) B) and C)

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Question 42

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AV Sales has net revenue of $513,000 and costs of $406,800.The depreciation expense is $43,800,interest paid is $11,200,and dividends for the year are$4,500.The tax rate is 33 percent.What is the addition to retained earnings?

A) $38,804
B) $34,304
C) $28,120
D) $29,804
E) $30,450

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

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Question 43

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The balance sheet of Binger,Inc.has the following balances; $\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Beginning } \\\text { balance }\end{array} & \begin{array} { r } \text { Ending } \\\text { balance }\end{array} \\\hline \text { Cash } & \$ 30,300 & \$ 32,800 \\\hline \text { Accounts receivable } & 48,200 & 51,600 \\\hline \text { Inventory } & 126,500 & 129,200 \\\hline \text { Net fixed assets } & 611,900 & 574,300 \\\hline \text { Accounts payable } & 43,200 & 53,600 \\\hline \text { Long-term debt } & 415,000 & 304,200 \\\hline\end{array}$ What is the amount of the change in net working capital?

Six months ago,Benders Gym repurchased $140,000 of its common stock.The company pays regular dividends totaling $18,500 per quarter.What is the amount of the cash flow to stockholders for the past year if 1,200 new shares were issued and sold for $38 a share?

Net working capital is defined as:

If a firm has a negative cash flow from assets every year for several years,the firm:

MNM & Co incurred depreciation expenses of $36,810 last year.The sales were $903,480 and the addition to retained earnings was $11,530.The firm paid interest of $7,711 and dividends of $7,500.The tax rate was 33 percent.What was the amount of the costs incurred by the company?

Lester's Fried Chick'n purchased its building 11 years ago at a cost of $189,000.The building is currently valued at $209,000.The firm has other fixed assets that cost $56,000 and are currently valued at $32,000.To date,the firm has recorded a total of $49,000 in depreciation on the various assets it currently owns.Current liabilities are $36,600 and net working capital is $18,400.What is the total book value of the firm's assets?

Red's Tractors owes $52,311 in taxes on a taxable income of $608,606.The company has determined that it will owe $56,211 in tax if its taxable income rises to $620,424.What is the marginal tax rate at this level of income?

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?

Plenti-Good Foods has ending net fixed assets of $98,700 and beginning net fixed assets of $84,900.During the year,the firm sold assets with a total book value of $13,200 and also recorded $9,800 in depreciation expense.How much did the company spend to buy new fixed assets?

Net working capital decreases when:

Which one of the following terms is defined as the total tax paid divided by the total taxable income?

The Embroidery Shoppe had beginning retained earnings of $18,670.During the year,the company reported sales of $83,490,costs of $68,407,depreciation of $8,200,dividends of $950,and interest paid of $478.The tax rate is 34 percent.What is the retained earnings balance at the end of the year?

Shareholders' equity is equal to:

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920.The depreciation expense for the year is $46,080 and the interest expense is $11,460.What is the amount of the net capital spending?

Outdoor Sports paid $12,500 in dividends and $9,310 in interest over the past year.Sales totaled $361,820 with costs of $267,940.The depreciation expense was $16,500 and the tax rate was35 percent.What was the amount of the operating cash flow?

Daniel's Market has sales of $43,800,costs of $40,400,depreciation expense of $2,500,and interest expense of $1,100.If the tax rate is 34 percent,what is the operating cash flow,OCF? Assume tax losses can be carried forward and utilized.

Pier Imports has cash of $41,100 and accounts receivable of $54,200,all of which is expected to be collected.The inventory cost $82,300 and can be sold today for $116,500.The fixed assets were purchased at a total cost of $234,500 of which $118,900 has been depreciated.The fixed assets can be sold today for $138,000.What is the total book value of the firm's assets?

The Toy Store has beginning retained earnings of $318,423.For the year,the company earned net income of $11,318 and paid dividends of $7,500.The company also issued $25,000 worth of new stock.What is the value of the retained earnings account at the end of the year?