Exam 3: Financial Statement Analysis and Long-Term Planning

Martha's Enterprises spent €2,400 to purchase equipment three years ago.This equipment is currently valued at €1,800 on today's statement of financial position but could actually be sold for €2,000.Net working capital is €200 and non-current liabilities is €800.Assuming the equipment is the firm's only non-current asset,what is the book value of shareholders' equity?

Which one of the following accounts is generally the most liquid?

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 them £300.What is the accounting value of its liquid assets?

According to International Accounting Standards,revenue is recognized as income when:

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?

Nabors plc 2010 Income Statement ( $£$ in millions) Net sales £9,610 Less: Cost of goods sold 6,310 Less: Depreciation 1,370 Eamings before interest and taxes 1,930 Less: Interest paid 630 Taxable Income £1,300 Less: Taxes 455 Net income £845 Nabors ple 2009 and 2010 Statement of financial positions ( $£$ in millions) 2009 2010 2009 2010 Cash £,310 £405 Trade payables £2,720 £2,570 Accounts rec. 2,640 3,055 Notes payable 100 0 Inventory 3,275 Total £2,820 £2,570 Total £6,225 £7,310 Non-current liabilities 7,875 8,100 Net non-current assets 10,960 10,670 Ordinary equity 5,000 5,250 Retained eamings 2,060 Total Assets £17,185 £17,980 Total liab.\& equity £17,185 £17,890 -What is the amount of the non-cash expenses for 2010?

Explain why the income statement is not a good representation of cash flow.

_____ refers to the cash flow that results from the firm's ongoing,normal business activities.

According to International Accounting Standards,costs are:

Knickerdoodles NV. $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\underline { 2009 }\quad\quad\quad\quad\quad\underline { 2010 }$ -What is net capital spending for 2010?

The cash flow to creditors includes the cash:

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 firm has £300 in inventory,£600 in non-current assets,£200 in accounts receivables,£100 in trade payables,and £50 in cash.What is the amount of the current assets?

_____ refers to the firm's interest payments less any net new borrowing.

a(n.____ asset is one which can be quickly converted into cash without significant loss in value.

Nabors plc 2010 Income Statement ( $£$ in millions) Net sales £9,610 Less: Cost of goods sold 6,310 Less: Depreciation 1,370 Eamings before interest and taxes 1,930 Less: Interest paid 630 Taxable Income £1,300 Less: Taxes 455 Net income £845 Nabors ple 2009 and 2010 Statement of financial positions ( $£$ in millions) 2009 2010 2009 2010 Cash £,310 £405 Trade payables £2,720 £2,570 Accounts rec. 2,640 3,055 Notes payable 100 0 Inventory 3,275 Total £2,820 £2,570 Total £6,225 £7,310 Non-current liabilities 7,875 8,100 Net non-current assets 10,960 10,670 Ordinary equity 5,000 5,250 Retained eamings 2,060 Total Assets £17,185 £17,980 Total liab.\& equity £17,185 £17,890 -What is the cash flow of the firm for 2010?

Net working capital is defined as:

_____ refers to the changes in net capital assets.

Pete's Boats has beginning non-current liabilities of €180 and ending non-current liabilities 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?

Cash flow to shareholders is defined as: