Exam 3: Understanding Financial Statements, taxes, and Cash Flows

Under current accounting rules,plant and equipment appear on a company's balance sheet valued at replacement value.

A firm's balance sheet provides a representation of the current market value of the company.

How does "free cash flow" differ from net profit?

Your firm has the following balance sheet statement items: total current liabilities of $805,000;total assets of $2,655,000;fixed and other assets of $1,770,000;and long-term debt of $200,000.What is the amount of the firm's total current assets?

Which of the following would NOT be included as equity in a corporate balance sheet?

Which of the following is NOT included in the calculation of free cash flows?

Based on the following selected financial information for Sheets Metalworks,calculate net income for 2009.

Holding all other variables constant,which of the following will decrease total equity? An increase in:

Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)?

Your firm has the following income statement items: sales of $52,000,000;income tax of $1,880,000;operating expenses of $9,000,000;cost of goods sold of $36,000,000;depreciation and amortization of $1,500,000;and interest expense of $800,000.For purposes of determining free cash flow,what is the amount of the firm's after-tax cash flow from operations?

Use the following information to answer the following question(s). In 2004,A & K,Inc.expects operating income (earnings before interest and taxes)of $18,000,000.In addition,the corporation has $20,000,000 of debt outstanding with a 10 percent interest rate and will pay $1,000,000 in dividends to its common stockholders. -Assume that A & K will receive no other sources of income during 2004.A & K's taxable income for 2004 will be:

Pearls,Inc.had sales in 1993 of $2.1 million.The common stockholders received $400,000 in cash dividends and preferred stockholders were paid $200,000.Interest totaling $150,000 was paid on outstanding debts.Operating expenses totaled $300,000,and cost of goods sold was $500,000.Stock that had been purchased for $50,000 in 1987 was sold for $70,000.What is the tax liability of Pearls,Inc.?

The income statement provides a statement of results for the firm's operations.

Who owns the retained earnings of a public firm?

The income statement represents a snapshot of account balances at one point in time.

Corporate income statements are usually compiled on an accrual,rather than cash,basis.

Use the following information to answer the following question(s). In 2004,A & K,Inc.expects operating income (earnings before interest and taxes)of $18,000,000.In addition,the corporation has $20,000,000 of debt outstanding with a 10 percent interest rate and will pay $1,000,000 in dividends to its common stockholders. -Tax tables are based on ________ tax rates.

-Based on the information contained in Table 3,what was the total amount of Snark Enterprise's common stock dividend for 1996?

Stock that is repurchased by the issuing company is called:

Dividends paid to a firm's stockholders,both preferred and common stockholders,are tax-deductible to the paying company.