Exam 3: The Financial System and the Level of Interest Rates

United Brands Corp. just completed their latest fiscal year. The firm had sales of $16,650,000. Depreciation and amortization was $832,500, interest expense for the year was $825,000, and selling general and administrative expenses totaled $1,665,000 for the year, and cost of goods sold was $9,990,000 for the year. Assuming a federal income tax rate of 34%, what was the United Brands net income after-tax?

-The Brick Company has announced the following financial information for the period ending March 31, 2017: sales of $1.4 million, cost of goods sold of $800,000, depreciation expenses of $175,000, and interest expenses of $90,000. Assume that the firm has an average tax rate of 40 percent. What is the company's net income?

The generally accepted accounting principles (GAAP) are:

Which of the following does NOT belong to an income statement?

When prices are rising, the value of ending inventory using the FIFO method rather than LIFO gives:

Companies repurchase their shares in the open market in the hope that it would boost the share price.

The average tax rate is the total tax payment divided by the taxable income.

Both depreciation and amortization are cash expenses that will serve to boost the firm's after-tax cash flows.

Centennial Brewery produced revenues of $1,145,227 in 2008. It has expenses (excluding depreciation) of $812,640, depreciation of $131,335, and interest expense of $81,112. It pays an average tax rate of 34 percent. What is the firm's net income after taxes? Round your final answer to the nearest dollar.

Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marketable securities worth $335,485, accounts payables worth $1,159,357, inventory of $1,651,599, accounts receivables of $1,488,121, short-term notes payable worth $313,663, and other current assets of $121,427. What is the company's net working capital?

-Parrino Corporation has announced that its net income for the year ended June 30, 2008, is $1,824,214. The company had an EBITDA of $5,174,366, and its depreciation and amortization expense was equal to $1,241,790. The company's average tax rate is 34 percent. What is the amount of interest expense for the firm?

What are the advantages and disadvantages of using market-value accounting?

The net book value of an asset is the historical cost less the accumulated depreciation.

Tyson Corporation bought raw materials on April 23, 2008 and also on July 2, 2008. Products produced during the months of May were sold in July. The firm uses FIFO to value its inventory. According to the matching principle, the firm's accountant should associate:

Shane, Inc., has completed its fiscal year and reported Total Assets of $1,000,000 and Total Liabilities of $300,000. Calculate the value of common equity.

On June 23, 2008, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The goods were shipped to Rynex on July 2. The firm's accountants should recognize the sale on:

Which of the following is NOT a noncash item?

The cost principle assumes that the parties to a transaction are economically rational and are free to act independently of each other.

Which of the following is NOT a cash flow from operating activities?

Accounting standards prescribed by generally accepted accounting principles (GAAP) are important because: