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Finance Flashcards

Finance Exam Review

On a balance sheet, deferred taxes are classified as: long term liabilities
Net working capital is defined as: current assets – current liabilities
An asset that can be quickly converted into cash without significant loss in value is referred to as being: liquid
The financial statement summarizing a firm’s accounting performance over a period of time is the: income statement
An accountant’s snapshot of the firm’s accounting value at a specific point in time balance sheet
Which term defines the tax rate that applies to the next dollar of taxable income earned? marginal
U.S. corporate taxes switch to a constant flat-rate tax once the average tax rate reaches:32 percent.33 percent.28 percent.40 percent.35 percent. 35 percent
The cash flow resulting from a firm’s ongoing, normal business activities is referred to as the: operating cash flow.
Capital spending is equal to:- ending next fixed assets minus beginning net fixed assets.- ending net fixed assets minus beginning net fixed assets plus depreciation.- ending total assets minus beginning total assets.- ending total assets minus beginning total assets minus depreciation.- beginning total assets plus asset purchases minus asset sales. ending net fixed assets minus beginning net fixed assets plus depreciation
Operating cash flow is defined as:- Pretax income – Taxes.- Net income – Dividends.- EBIT + Depreciation – Taxes.- Pretax income + Depreciation.- Cash flow to investors + Taxes. EBIT + depreciation – taxes
Which one of these terms refers to the firm’s interest payments less any net new borrowing?- operating cash flow- capital spending- net working capital- cash flow to stockholders- cash flow to creditors cash flow to creditors
Assuming the number of shares outstanding remains constant, an increase in dividends per share will reduce the:- earnings per share.- addition to retained earnings.- net income.- cash flow to stockholders.- cash flow from assets. addition to retained earnings
Which one of the following assets is generally the most liquid?- inventory- buildings- accounts receivable- equipment- patents accounts receivable
Which one of the following accounts is included in stockholders’ equity?- long-term debt- deferred taxes- plant and equipment- accumulated retained earnings- intangible assets accumulated retained earnings
Which one of these statements is correct?- Pretax income is equal to net income minus taxes.- The addition to retained earnings is equal to net income plus dividends.- Operating income is equal to operating revenue minus cost of goods sold.- Only current taxes are included in the tax expense.- Earnings per share can be negative but dividends per share cannot. Earnings per share can be negative but dividends per share cannot.
Cash flow from assets:- equals net income plus non-cash items.- can be positive, negative, or equal to zero.- equals operating cash flow minus net capital spending.- equals the addition to retained earnings.- equals operating cash flow minus the cash flow to creditors. can be positive, negative, or equal to zero
Net capital spending is equal to the:- net change in total assets plus depreciation.- net change in fixed assets plus depreciation.- net income plus depreciation.- difference between the market and book values of the total assets.- change in total assets. net change in fixed assets plus depreciation.
At the beginning of the year, long-term debt of a firm is $2,400 and total debt is $3,150. At the end of the year, long-term debt is $2,800 and total debt is $4,370. The interest paid is $40. What is the amount of the cash flow to creditors?$440−$40$1,260$1,180−$360 -$360
what are the two noncash items on a balance sheet? depreciation and deferred taxes

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