FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Reviewing Financial Statements

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

You are evaluating the balance sheet for Goodman's Bees Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $200,000, Accounts receivable = $1,100,000, Inventory = $2,000,000, Accrued wages and taxes = $500,000, Accounts payable = $600,000, and Notes payable = $100,000. Calculate Goodman's Bees' net working capital.

A) $2,000,000
B) $2,100,000
C) $1,400,000
D) $1,900,000

E) None of the above
F) C) and D)

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Balance Sheet Jack and Jill Corporation's year-end 2009 balance sheet lists current assets of $250,000, fixed assets of $800,000, current liabilities of $195,000, and long-term debt of $300,000. What is Jack and Jill's total stockholders' equity?

A) $495,000
B) $555,000
C) $1,050,000
D) There is not enough information to calculate total stockholder's equity.

E) A) and D)
F) A) and C)

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Which financial statement reports a firm's assets, liabilities, and equity at a particular point in time?

Market Value versus Book Value Acme Bricks balance sheet lists net fixed assets as $40 million. The fixed assets could currently be sold for $50 million. Acme's current balance sheet shows current liabilities of $15 million and net working capital of $12 million. If all the current accounts were liquidated today, the company would receive $77 million cash after paying $15 million in liabilities. What is the book value of Acme's assets today? What is the market value of these assets?

Mr. Husker's Tuxedos, Corp. began the year 2011 with $205 million in retained earnings. The firm earned net income of $30 million in 2011 and paid $5 million to its preferred stockholders and $12 million to its common stockholders. What is the year-end 2011 balance in retained earnings for Mr. Husker's Tuxedos?

Statement of Retained Earnings Night Scapes, Corp. began the year 2008 with $10 million in retained earnings. The firm suffered a net loss of $2 million in 2008 and yet paid $2 million to its preferred stockholders and $1 million to its common stockholders. What is the year-end 2008 balance in retained earnings for Night Scapes?

Debt versus Equity Financing You are considering a stock investment in one of two firms (AllDebt, Inc. and AllEquity, Inc.) , both of which operate in the same industry and have identical operating income of $400,000. AllDebt, Inc. finances its $800,000 in assets with $600,000 in debt (on which it pays 5 percent interest annually) and $200,000 in equity. AllEquity, Inc. finances its $800,000 in assets with no debt and $800,000 in equity. Both firms pay a tax rate of 30 percent on their taxable income. What are the asset funders' (the debt holders and stockholders') resulting return on assets for the two firms?

Income Statement You have been given the following information for Romeo's Rockers Corp.: net sales = $5,200,000; Cost of goods sold = $2,100,000; Addition to retained earnings = $1,000,000; Dividends paid to preferred and common stockholders = $400,000; Interest expense = $200,000. The firm's tax rate is 30 percent. What is the depreciation expense for Romeo's Rockers Corp.?

Corporate Taxes The Sasnak Corporation had a 2010 taxable income of $4,450,000 from operations after all operating costs but before (1) interest charges of $750,000, (2) dividends received of $900,000, (3) dividends paid of $500,000, and (4) income taxes. Using the tax schedule in Table 2.3, what is Sasnak's income tax liability? What are Sasnak's average and marginal tax rates on taxable income from operations?

Income Statement Listed below is the 2008 income statement for Lamps, Inc. The CEO of Lamps wants the company to earn a net income of $12 million in 2009. Cost of goods sold is expected to be 75 percent of net sales, depreciation expense is not expected to change, interest expense is expected to increase to $4 million, and the firm's tax rate will be 40 percent. What is the net sales needed to produce net income of $12 million?

Balance Sheet Ted's Taco Shop has total assets of $5 million. Forty percent of these assets are financed with debt of which $400,000 is current liabilities. The firm has no preferred stock but the balance in common stock and paid-in surplus is $1 million. Using this information what is the balance for long-term debt and retained earnings on Ted's Taco Shop's balance sheet?

Free Cash Flow Catering Corp. reported free cash flows for 2008 of $8 million and investment in operating capital of $2 million. Catering listed $1 million in depreciation expense and $2 million in taxes on its 2008 income statement. What was Catering's 2008 EBIT?

All of the following are reasons that one should be cautious in interpreting financial statements except ____________.

Zoeckler Mowing & Landscaping's year-end 2011 balance sheet lists current assets of $350,000, fixed assets of $325,000, current liabilities of $145,000, and long-term debt of $185,000. Calculate Zoeckler's total stockholders' equity.

Corporate Taxes The Ohio Corporation had a 2010 taxable income of $50,000,000 from operations after all operating costs but before (1) interest charges of $500,000, (2) dividends received of $45,000, (3) dividends paid of $10,000,000, and (4) income taxes. Using the tax schedule in Table 2.3, what is Ohio's income tax liability? What are Ohio's average and marginal tax rates on taxable income from operations?

In 2011, Usher Sports Shop had cash flows from investing activities of ($2,150,000) and cash flows from financing activities of ($3,219,000) . The balance in the firm's cash account was $980,000 at the beginning of 2011 and $1,025,000 at the end of the year. Calculate Usher Sports Shop's cash flow from operations for 2011.

On which of the four major financial statements would you find the common stock and paid-in surplus?

Statement of Retained Earnings Soccer Starz, Inc. started the year with a balance of retained earnings of $25 million and ended the year with retained earnings of $32 million. The company paid dividends of $2 million to the preferred stock holders and $6 million to common stock holders. What was Soccer Starz's net income for the year?

Cash flows available to pay the firm's stockholders and debt holders after the firm has made the necessary working capital investments, fixed asset investments, and developed the necessary new products to sustain the firm's ongoing operations is referred to as _________________.

All of the following would be a result of changing to the MACRS method of depreciation except _______.