Exam 3: Understanding Financial Statements,taxes and Cash Flows

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;and interest expense of $800,000.Compute the firm's gross profit margin.

Which of the following is not included in computing EBT (earnings before taxes)?

Net plant and equipment is

Which of the following does NOT represent cash outflows to the firm?

The income statement shows a company's earnings since it has been in business.

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

Which of the following best represents the stream of income that is available to shareholders?

Using the information provided,calculate net income for 2013.Assume a tax rate of 35 percent. Year 2013 Inventory $5,000 Revenues 200,000 Depreciation expense 5,000 Cost of goods sold 100,000 Interest expense 10,000 Operating expenses 30,000

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

Which of the following represents a source of cash?

The balance sheet includes information about the company's assets and liabilities.

The company's gross profit margin is EBIT divided by net sales.

Which of the following best describes a balance sheet?

When analyzing the cash flows from a new project proposal,a company should always use its marginal tax rate.

When a corporation sells ordinary shares to investors,the amount is added to revenue on the income statement.

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

In Australia ordinary shareholder tax rates may be above or below the company tax rate.

A & K Co.expects to have earnings before taxes of $250,000 to $300,000.The company's marginal tax rate is 39% and its average tax rate about 33%.For every additional dollar A & K pays out in common dividends,its income tax liability will

Patriot Corporation purchased manufacturing equipment with an expected useful life of five years.The purchase of the machinery would be shown as

On an accrual basis income statement,revenues and expenses always match the firm's cash flow.