Exam 3: Financial Statement Analysis and Long-Term Planning

Knickerdoodles NV. $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\underline { 2009 }\quad\quad\quad\quad\quad\underline { 2010 }$ -What is the cash flow to shareholders for 2010?

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?

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

Note that we added depreciation back to operating cash flow and to additions to non-current assets.Why add it back twice? Isn't this double-counting?

Note that in all of our cash flow computations to determine cash flow of the firm,we never include the addition to retained earnings.Why not? Is this an oversight?

Which of the following are all components of the statement of cash flows?

_____ refers to the firm's dividend payments less any net new equity raised.

Under International Accounting Standards,a firm's assets are reported at:

Interpret,in words,what cash flow of the firm represents by discussing operating cash flow,changes in net working capital,and additions to non-current assets.

As seen on an income statement:

A current asset is:

Knickerdoodles NV. $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\underline { 2009 }\quad\quad\quad\quad\quad\underline { 2010 }$ -What is the cash flow of the firm for 2010?

When making financial decisions related to assets,you should:

Depreciation:

A firm starts its year with a positive net working capital.During the year,the firm acquires more short-term debt than it does short-term assets.This means that:

Which of the following are included in current assets? I.Equipment II.Inventory III.Trade payables IV.Cash

Net capital spending is equal to:

Sometimes when businesses are critically delinquent on their tax liabilities,the tax authority comes in and literally seizes the business by chasing all of the employees out of the building and changing the locks.What does this tell you about the importance of taxes relative to our discussion of cash flow? Why might a business owner want to avoid such an occurrence?

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? Taxuble Inctame Tax Rate 0-50,000 15\% 50,001-75,000 25\% 75,001-100,000 44\% 100,001-335,000 29\%

Discuss the difference between book values and market values on the statement of financial position and explain which is more important to the financial manager and why.