Chapter 02 Financial Statements and Cash Flow (стр. 6 )

Net working capital = $900 - $600 - $200 = $100

Difficulty level: Medium
Topic: NET WORKING CAPITAL
Type: PROBLEMS
 

54. Brad's Company has equipment with a book value of $500 that could be sold today at a 50% discount. Its inventory is valued at $400 and could be sold to a competitor for that amount. The firm has $50 in cash and customers owe it $300. What is the accounting value of its liquid assets? 
A. $50
B. $350
C. $700
D. $750
E. $1,000

Liquid assets = $400 + $50 + $300 = $750

Difficulty level: Medium
Topic: LIQUIDITY
Type: PROBLEMS
 

55. Martha's Enterprises spent $2,400 to purchase equipment three years ago. This equipment is currently valued at $1,800 on today's balance sheet but could actually be sold for $2, working capital is $200 and long-term debt is $800. Assuming the equipment is the firm's only fixed asset, what is the book value of shareholders' equity? 
A. $200
B. $800
C. $1,200
D. $1,400
E. The answer cannot be determined from the information provided

Book value of shareholders' equity = $1,800 + $200 - $800 = $1,200

Difficulty level: Medium
Topic: BOOK VALUE
Type: PROBLEMS
 

56. Art's Boutique has sales of $640,000 and costs of $480,000. Interest expense is $40,000 and depreciation is $60,000. The tax rate is 34%. What is the net income? 
A. $20,400
B. $39,600
C. $50,400
D. $79,600
E. $99,600

Taxable income = $640,000 - $480,000 - $40,000 - $60,000 = $60,000; Tax = .34($60,000) = $20,400; Net income = $60,000 - $20,400 = $39,600

Difficulty level: Medium
Topic: NET INCOME
Type: PROBLEMS
 

57. Given the tax rates as shown, what is the average tax rate for a firm with taxable income of $126,500?
  
A. 21.38%
B. 23.88%
C. 25.76%
D. 34.64%
E. 39.00%

Tax = .15($50,000) + .25($25,000) + .34($25,000) + .39($126,500 - $100,000) = $32,585; Average tax rate = $32,585 ¸ $126,500 = .2576 = 25.76%

Difficulty level: Medium
Topic: MARGINAL TAX RATE
Type: PROBLEMS
 

58. The tax rates are as shown. Your firm currently has taxable income of $79,400. How much additional tax will you owe if you increase your taxable income by $21,000?
  
A. $7,004
B. $7,014
C. $7,140
D. $7,160
E. $7,174

Additional tax = .34($100,000 - $79,400) + .39($79,400 + $21,000 - $100,000) = $7,160

Difficulty level: Medium
Topic: TAXES
Type: PROBLEMS
 

59. Your firm has net income of $198 on total sales of $1,200. Costs are $715 and depreciation is $145. The tax rate is 34%. The firm does not have interest expenses. What is the operating cash flow? 
A. $93
B. $241
C. $340
D. $383
E. $485

Earnings before interest and taxes = $1,200 - $715 - $145 = $340; Tax = [$198 ¸ (1 - .34)] - $198 = $102; Operating cash flow = $340 + $145 - $102 = $383

Difficulty level: Medium
Topic: OPERATING CASH FLOW
Type: PROBLEMS
 

60. Teddy's Pillows has beginning net fixed assets of $480 and ending net fixed assets of $530. Assets valued at $300 were sold during the year. Depreciation was $40. What is the amount of capital spending? 
A. $10
B. $50
C. $90
D. $260
E. $390

Net capital spending = $530 - $480 + $40 = $90

Difficulty level: Medium
Topic: NET CAPITAL SPENDING
Type: PROBLEMS
 

61. At the beginning of the year, a firm has current assets of $380 and current liabilities of $210. At the end of the year, the current assets are $410 and the current liabilities are $250. What is the change in net working capital? 
A. -$30
B. -$10
C. $0
D. $10
E. $30

Change in net working capital = ($410 - $250) - ($380 - $210) = -$10

Difficulty level: Medium
Topic: CHANGE IN NET WORKING CAPITAL
Type: PROBLEMS
 

62. At the beginning of the year, long-term debt of a firm is $280 and total debt is $340. At the end of the year, long-term debt is $260 and total debt is $350. The interest paid is $30. What is the amount of the cash flow to creditors? 
A. -$50
B. -$20
C. $20
D. $30
E. $50

Cash flow to creditors = $30 - ($260 - $280) = $50

Difficulty level: Medium
Topic: CASH FLOW TO CREDITORS
Type: PROBLEMS
 

63. Pete's Boats has beginning long-term debt of $180 and ending long-term debt of $210. The beginning and ending total debt balances are $340 and $360, respectively. The interest paid is $20. What is the amount of the cash flow to creditors? 
A. -$10
B. $0
C. $10
D. $40
E. $50

Cash flow to creditors = $20 - ($210 - $180) = -$10

Difficulty level: Medium
Topic: CASH FLOW TO CREDITORS
Type: PROBLEMS
 

64. Peggy Grey's Cookies has net income of $360. The firm pays out 40% of the net income to its shareholders as dividends. During the year, the company sold $80 worth of common stock. What is the cash flow to stockholders? 
A. $64
B. $136
C. $144
D. $224
E. $296

Cash flow to stockholders = .40($360) - $80 = $64

Difficulty level: Medium
Topic: CASH FLOW TO STOCKHOLDERS
Type: PROBLEMS
 

65. Thompson's Jet Skis has operating cash flow of $218. Depreciation is $45 and interest paid is $35. A net total of $69 was paid on long-term debt. The firm spent $180 on fixed assets and increased net working capital by $38. What is the amount of the cash flow to stockholders? 
A. -$104
B. -$28
C. $28
D. $114
E. $142

Cash flow of the firm = $218 - $38 - $180 = $0; Cash flow to creditors = $35 - (-$69) = $104; Cash flow to stockholders = $0 - $104 = -$104

Difficulty level: Medium
Topic: CASH FLOW TO STOCKHOLDERS
Type: PROBLEMS
 

  

  

66. What is the change in the net working capital from 2007 to 2008? 
A. $1,235
B. $1,035
C. $1,335
D. $3,405
E. $4,740

Change in net working capital = ($7,310 - $2,570) - ($6,225 - $2,820) = $1,335

Difficulty level: Medium
Topic: CHANGE IN NET WORKING CAPITAL
Type: PROBLEMS
 

67. What is the amount of the non-cash expenses for 2008? 
A. $570
B. $630
C. $845
D. $1,370
E. $2,000

The non-cash expense is depreciation in the amount of $1,370.

Difficulty level: Medium
Topic: NONCASH EXPENSES
Type: PROBLEMS
 

68. What is the amount of the net capital spending for 2008? 
A. -$290
B. $795
C. $1,080
D. $1,660
E. $2,165

Net capital spending = $10,670 - $10,960 + $1,370 = $1,080

Difficulty level: Medium
Topic: NET CAPITAL SPENDING
Type: PROBLEMS
 

69. What is the operating cash flow for 2008? 
A. $845
B. $1,930
C. $2,215
D. $2,845
E. $3,060

Operating cash flow = $1,930 + $1,370 - $455 = $2,845

Difficulty level: Medium
Topic: OPERATING CASH FLOW
Type: PROBLEMS
 

70. What is the cash flow of the firm for 2008? 
A. $430
B. $485
C. $1,340
D. $2,590
E. $3,100

Operating cash flow = $1,930 + $1,370 - $455 = $2,845; Change in net working capital = ($7,310 - $2,570) - ($6,225 - $2,820) = $1,335; Net capital spending = $10,670 - $10,960 + $1,370 = $1,080; Cash flow of the firm = $2,845 - $1,335 - $1,080 = $430

Difficulty level: Medium
Topic: CASH FLOW OF THE FIRM
Type: PROBLEMS
 

71. What is the amount of net new borrowing for 2008? 
A. -$225
B. -$25
C. $0
D. $25
E. $225

Net new borrowing = $8,100 - $7,875 = $225

Difficulty level: Medium
Topic: NET NEW BORROWING
Type: PROBLEMS
 

72. What is the cash flow to creditors for 2008? 
A. -$405
B. -$225
C. $225
D. $405
E. $630

Cash flow to creditors = $630 - ($8,100 - $7,875) = $405

Difficulty level: Medium
Topic: CASH FLOW TO CREDITORS
Type: PROBLEMS
 

  

73. What is the net working capital for 2008? 
A. $345
B. $405
C. $805
D. $812
E. $1,005

Net working capital = $75 + $502 + $640 - $405 = $812

Difficulty level: Medium
Topic: NET WORKING CAPITAL
Type: PROBLEMS
 

74. What is the change in net working capital from 2007 to 2008? 
A. -$93
B. -$7
C. $7
D. $85
E. $97

Change in net working capital = ($75 + $502 + $640 - $405) - ($70 + $563 + $662 - $390) = -$93