Ch. 2 Finance

Fixed assets can be tangible (truck) or intangible (patent)
current assets minus current liabilities. Net working capital is defined as:
The common set of standards and procedures by which audited financial statements are prepared is known as the: Generally Accepted Accounting Procedures
Which one of the following is the financial statement that summarizes a firm’s revenue and expenses over a period of time? Income statement
The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate. marginal
The cash flow related to interest payments less any net new borrowing is called the: cash flow to creditors
Cash flow to stockholders is defined as: Dividends paid less net new equity raised
Which of the following are included in current liabilities? I. note payable to a supplier in eight monthsIII. account payable to a supplier that is due next week
Assets are listed on the balance in order of decreasing liquidity. Inventory is least liquid. Fixed assets not liquid.
Which of the following is the most liquid? accounts receivable
The higher the degree of financial leverage employed by a firm, the: higher the probability that the firm will encounter financial distress.
Which one of the following statements related to taxes is correct? The marginal tax rate for a firm can be either higher than or the same as the average tax rate.
A positive cash flow to stockholders indicates which one of the following with certainty? The dividends paid exceeded the net new equity raised.

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