Question 1

Which one of the following is the definition of investment cash flow?

Accepted Answer

A)  revenue minus expenses 
B)  cash flow from the purchases and sales of fixed assets and investments 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income 
A)  revenue minus expenses 
B)  cash flow from the purchases and sales of fixed assets and investments 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income

Question 2

Which one of the following is an analysis of a firm's sources and uses of cash over a period of time?

Accepted Answer

A)  income statement 
B)  pro-forma income statement 
C)  cash flow statement 
D)  tax return 
E)  balance sheet 
A)  income statement 
B)  pro-forma income statement 
C)  cash flow statement 
D)  tax return 
E)  balance sheet

Question 3

Which one of the following is the cash flow resulting from the payment of dividends and the issuance or repurchase of equity securities?

Accepted Answer

A)  balance sheet cash flow 
B)  operating cash flow 
C)  financing cash flow 
D)  business cash flow 
E)  investment cash flow 
A)  balance sheet cash flow 
B)  operating cash flow 
C)  financing cash flow 
D)  business cash flow 
E)  investment cash flow

Question 4

Which one of the following is used to pay dividends or kept as retained earnings by a firm?

Accepted Answer

A)  equity 
B)  net cash flow 
C)  revenue 
D)  net income 
E)  expense 
A)  equity 
B)  net cash flow 
C)  revenue 
D)  net income 
E)  expense

Question 5

Which one of the following is NOT a financing cash flow according to standard accounting practice?

Accepted Answer

A)  new issue of stock 
B)  repurchase of stock 
C)  new issue of debt 
D)  interest payments 
E)  dividend payments 
A)  new issue of stock 
B)  repurchase of stock 
C)  new issue of debt 
D)  interest payments 
E)  dividend payments

Question 6

Winter's Clothing has a loan payable to a bank which is due 18 months from now. How is this loan classified on the firm's financial statements?

Accepted Answer

A)  fixed asset 
B)  current liability 
C)  long-term debt 
D)  equity 
E)  expense 
A)  fixed asset 
B)  current liability 
C)  long-term debt 
D)  equity 
E)  expense

Question 7

Which one of the following is income realized in cash form?

Accepted Answer

A)  net income 
B)  revenue 
C)  cash flow 
D)  retained earnings 
E)  dividends 
A)  net income 
B)  revenue 
C)  cash flow 
D)  retained earnings 
E)  dividends

Question 8

For the year, Widgets Manufacturing, Inc. increased its current accounts by $52,000, decreased its current liabilities by $38,000, and decreased its fixed assets by $31,000. What is the investment cash flow for the year?

Accepted Answer

A)  -$31,000 
B)  -$12,000 
C)  $19,000 
D)  $31,000 
E)  $48,000 
A)  -$31,000 
B)  -$12,000 
C)  $19,000 
D)  $31,000 
E)  $48,000

Question 9

Regulation FD requires companies to do which one of the following when disclosing material non-public information?

Accepted Answer

A)  advise the SEC 7 working days prior to such disclosure 
B)  disclose the information without preference to any party or parties 
C)  only disclose the information to professional analysts 
D)  only disclose the information after a 7-day advance notice of an announcement 
E)  disclose the information only after a 24-hour delay 
A)  advise the SEC 7 working days prior to such disclosure 
B)  disclose the information without preference to any party or parties 
C)  only disclose the information to professional analysts 
D)  only disclose the information after a 7-day advance notice of an announcement 
E)  disclose the information only after a 24-hour delay

Question 10

The summation of the operating, investment, and financing cash flows for a stated period of time must equal which one of the following for the same time period?

Accepted Answer

A)  net income 
B)  total assets 
C)  ending cash balance 
D)  change in the cash balance 
E)  taxable income 
A)  net income 
B)  total assets 
C)  ending cash balance 
D)  change in the cash balance 
E)  taxable income

Question 11

Which one of the following represents the amounts owed by a firm to other parties?

Accepted Answer

A)  assets 
B)  cash inflows 
C)  equities 
D)  liabilities 
E)  expenses 
A)  assets 
B)  cash inflows 
C)  equities 
D)  liabilities 
E)  expenses

Question 12

Pro forma financial statements are statements based on which one of the following?

Accepted Answer

A)  projected future income, cash flows, and other non-cash items 
B)  historical revenue and expenses 
C)  historical asset and liability values 
D)  current period cash flows 
E)  current period revenues and expenses 
A)  projected future income, cash flows, and other non-cash items 
B)  historical revenue and expenses 
C)  historical asset and liability values 
D)  current period cash flows 
E)  current period revenues and expenses

Question 13

Behrend Corporation has annual sales of $5.5 million, depreciation of $475,000, operating expenses of $689,000, cost of goods sold of $2.3 million, and interest expense of $230,000. What is the operating income?

Accepted Answer

A)  $1,911,000 
B)  $2,036,000 
C)  $3,525,000 
D)  $4,000,000 
E)  $4,811,000 
A)  $1,911,000 
B)  $2,036,000 
C)  $3,525,000 
D)  $4,000,000 
E)  $4,811,000

Question 14

ABC Construction, Inc. has buildings and equipment of $315,600, long-term debt of $154,700, accounts payable of $52,000, cash of $9,800, accounts receivable of $18,300, inventory of $62,000, and retained earnings of $147,000. What is the total equity of the firm?

Accepted Answer

A)  $5,200 
B)  $97,000 
C)  $147,000 
D)  $199,000 
E)  $346,000 
A)  $5,200 
B)  $97,000 
C)  $147,000 
D)  $199,000 
E)  $346,000

Question 15

A company has a price-earnings ratio of 22 and a price-cash flow ratio of 12.6. If the earnings per share are $1.75, what is the cash flow per share?

Accepted Answer

A)  $2.16 
B)  $2.51 
C)  $3.06 
D)  $3.14 
E)  $3.64 
A)  $2.16 
B)  $2.51 
C)  $3.06 
D)  $3.14 
E)  $3.64

Question 16

Which one of the following will increase the return on equity?

Accepted Answer

A)  increase in the corporate tax rate 
B)  decrease in fixed costs 
C)  issuance of debt to purchase equipment 
D)  increase in variable costs per unit 
E)  decrease in net sales 
A)  increase in the corporate tax rate 
B)  decrease in fixed costs 
C)  issuance of debt to purchase equipment 
D)  increase in variable costs per unit 
E)  decrease in net sales

Question 17

The Cruise Ship Co. has taxable income of $4,000,000. The company paid out $550,000 in interest expense. The tax rate is 35 percent and the dividend payout ratio is 30 percent. What is the amount that was paid out in dividends?

Accepted Answer

A)  $420,000 
B)  $550,000 
C)  $672,750 
D)  $780,000 
E)  $980,000 
A)  $420,000 
B)  $550,000 
C)  $672,750 
D)  $780,000 
E)  $980,000

Question 18

A firm has net sales of $65,000, operating expenses of $21,300, depreciation of $5,000, cost of goods sold of $37,000, and interest expense of $3,500. What is the operating margin?

Accepted Answer

A)  -2.8 percent 
B)  2.6 percent 
C)  4.9 percent 
D)  9.2 percent 
E)  10.3 percent 
A)  -2.8 percent 
B)  2.6 percent 
C)  4.9 percent 
D)  9.2 percent 
E)  10.3 percent

Question 19

Young Industries has a 3-year bank loan of $85,000, a 6-month note payable of $6,000, a $67,300 mortgage, and accounts payable of $22,500. What is the amount of the total current liabilities? (Ignore the current portion of any long-term debt.)

Accepted Answer

A)  $5,000 
B)  $16,200 
C)  $28,500 
D)  $64,200 
E)  $117,000 
A)  $5,000 
B)  $16,200 
C)  $28,500 
D)  $64,200 
E)  $117,000

Question 20

Which two of the following are generally used to fund the external financing need?
I. sale of fixed assets
II. increase in accounts payable
III. issuance of long-term debt
IV. sale of equity securities

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  II and IV 
E)  III and IV 
A)  I and II 
B)  I and III 
C)  II and III 
D)  II and IV 
E)  III and IV

Which one of the following is the definition of investment cash flow?

Which one of the following is an analysis of a firm's sources and uses of cash over a period of time?

Which one of the following is the cash flow resulting from the payment of dividends and the issuance or repurchase of equity securities?

Which one of the following is used to pay dividends or kept as retained earnings by a firm?

Which one of the following is NOT a financing cash flow according to standard accounting practice?

Winter's Clothing has a loan payable to a bank which is due 18 months from now. How is this loan classified on the firm's financial statements?

Which one of the following is income realized in cash form?

For the year, Widgets Manufacturing, Inc. increased its current accounts by $52,000, decreased its current liabilities by $38,000, and decreased its fixed assets by $31,000. What is the investment cash flow for the year?

Regulation FD requires companies to do which one of the following when disclosing material non-public information?

The summation of the operating, investment, and financing cash flows for a stated period of time must equal which one of the following for the same time period?

Which one of the following represents the amounts owed by a firm to other parties?

Pro forma financial statements are statements based on which one of the following?

Behrend Corporation has annual sales of $5.5 million, depreciation of $475,000, operating expenses of $689,000, cost of goods sold of $2.3 million, and interest expense of $230,000. What is the operating income?

ABC Construction, Inc. has buildings and equipment of $315,600, long-term debt of $154,700, accounts payable of $52,000, cash of $9,800, accounts receivable of $18,300, inventory of $62,000, and retained earnings of $147,000. What is the total equity of the firm?

A company has a price-earnings ratio of 22 and a price-cash flow ratio of 12.6. If the earnings per share are $1.75, what is the cash flow per share?

Which one of the following will increase the return on equity?

The Cruise Ship Co. has taxable income of $4,000,000. The company paid out $550,000 in interest expense. The tax rate is 35 percent and the dividend payout ratio is 30 percent. What is the amount that was paid out in dividends?

A firm has net sales of $65,000, operating expenses of $21,300, depreciation of $5,000, cost of goods sold of $37,000, and interest expense of $3,500. What is the operating margin?

Young Industries has a 3-year bank loan of $85,000, a 6-month note payable of $6,000, a $67,300 mortgage, and accounts payable of $22,500. What is the amount of the total current liabilities? (Ignore the current portion of any long-term debt.)

Which two of the following are generally used to fund the external financing need? I. sale of fixed assets II. increase in accounts payable III. issuance of long-term debt IV. sale of equity securities

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate Bonds

Government Bonds

Mortgage-Backed Securities

Filters

Exam 17: Projecting Cash Flow and Earnings

Which one of the following is the definition of investment cash flow?

Which one of the following is an analysis of a firm's sources and uses of cash over a period of time?

Which one of the following is the cash flow resulting from the payment of dividends and the issuance or repurchase of equity securities?

Which one of the following is used to pay dividends or kept as retained earnings by a firm?

Which one of the following is NOT a financing cash flow according to standard accounting practice?

Winter's Clothing has a loan payable to a bank which is due 18 months from now. How is this loan classified on the firm's financial statements?

Which one of the following is income realized in cash form?

For the year, Widgets Manufacturing, Inc. increased its current accounts by $52,000, decreased its current liabilities by $38,000, and decreased its fixed assets by $31,000. What is the investment cash flow for the year?

Regulation FD requires companies to do which one of the following when disclosing material non-public information?

The summation of the operating, investment, and financing cash flows for a stated period of time must equal which one of the following for the same time period?

Which one of the following represents the amounts owed by a firm to other parties?

Pro forma financial statements are statements based on which one of the following?

Behrend Corporation has annual sales of $5.5 million, depreciation of $475,000, operating expenses of $689,000, cost of goods sold of $2.3 million, and interest expense of $230,000. What is the operating income?

ABC Construction, Inc. has buildings and equipment of $315,600, long-term debt of $154,700, accounts payable of $52,000, cash of $9,800, accounts receivable of $18,300, inventory of $62,000, and retained earnings of $147,000. What is the total equity of the firm?

A company has a price-earnings ratio of 22 and a price-cash flow ratio of 12.6. If the earnings per share are $1.75, what is the cash flow per share?

Which one of the following will increase the return on equity?

The Cruise Ship Co. has taxable income of $4,000,000. The company paid out $550,000 in interest expense. The tax rate is 35 percent and the dividend payout ratio is 30 percent. What is the amount that was paid out in dividends?

A firm has net sales of $65,000, operating expenses of $21,300, depreciation of $5,000, cost of goods sold of $37,000, and interest expense of $3,500. What is the operating margin?

Young Industries has a 3-year bank loan of $85,000, a 6-month note payable of $6,000, a $67,300 mortgage, and accounts payable of $22,500. What is the amount of the total current liabilities? (Ignore the current portion of any long-term debt.)

Which two of the following are generally used to fund the external financing need? I. sale of fixed assets II. increase in accounts payable III. issuance of long-term debt IV. sale of equity securities

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate Bonds

Government Bonds

Mortgage-Backed Securities

Filters