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60) One of the reasons why cash flow analysis is popular is because:
A) cash flows are more subjective than net income.
B) deferred taxes require future cash payment.
C) cash flows are strictly defined by Generally Accepted Accounting Principles (GAAP).
D) it is difficult to manipulate, or spin the cash flows.
E) operating cash flows are found on the income statement.
61) Total equity is $1,620, fixed assets are $1,810, long-term debt is $650, and short-term debt is
$300. What is the amount of current assets?
A) $760
B) $360
C) $1,140
D) $480
E) $790
62) Southwest Co. has equipment with a book value of $3,560 that could be sold today for
$3,900. Its inventory is valued at $1,780 and could be sold immediately to a competitor at a
discount of 25 percent. The firm has $260 in cash and customers owe the firm $950, of which 98
percent is collectible. What is the current market value of the firm's assets?
A) $6,086
B) $5,536
C) $6,426
D) $6,316
E) $5,946
63) Martha's Enterprises spent $4,100 to purchase equipment three years ago. This equipment is
currently valued at $2,700 on today's balance sheet but could actually be sold for $3,200. Net
working capital is $400 and long-term debt is $2,300. Assuming the equipment is the firm's only
fixed asset, what is the book value of shareholders' equity?
A) $1,300
B) $800
C) $1,600
D) $1,900
E) $2,200
64) Mart's Boutique has sales of $820,000 and costs of $540,000. Interest expense is $36,000 and
depreciation is $59,000. The tax rate is 21 percent. What is the net income?
A) $221,200
B) $146,150
C) $105,000
D) $179,250
E) $139,050
65) Upton Industries has revenues of $42,629, interest expense of $1,230, depreciation of
$2,609, cost of goods sold of $23,704, dividends paid of $1,200, and administrative expenses of
$7,040. Assume the tax rate is 22 percent. What is the addition to retained earnings?
A) $5,075.88
B) $4,630.19
C) $3,766.67
D) $4,903.18
E) $5,230.04
66) This year, Johnson Mills has annual revenue of $37,800, cost of goods sold of $23,200, and
administrative expenses of $6,300. The firm paid $700 in dividends, $280 in interest, and has a
total tax rate of 21 percent. The firm will add $2,810 to retained earnings. What is the
depreciation expense?
A) $2,300
B) $3,709
C) $2,640
D) $780
E) $3,577
67) Delfinio's has total revenues of $4,315, selling and administrative expenses of $611,
depreciation of $309, cost of goods sold of $2,403, taxes of $178, dividends of $80, and interest
expense of $168. What is the amount of the non-cash items?
A) $481
B) $477
C) $248
D) $309
E) $567
68) Deep Water Mining added $411 to retained earnings last year on sales of $24,646. The
administrative expenses were $4,370, depreciation was $812, dividends paid were $285, and the
interest expense was $103. What was the cost of goods sold if the total tax rate was 23 percent?
A) $20,225
B) $24,385
C) $18,457
D) $14,815
E) $21,393
69) Daniels Transport has operating income of $68,200, interest expense of $210, dividends paid
of $320, depreciation of $12,400, other income of $2,100, common stock of $48,500 with a par
value of $1 per share, and retained earnings of $29,700. What is the earnings per share if the tax
rate is 21 percent?
A) $1.14
B) $1.21
C) $.82
D) $.96
E) $1.33
70) Given the personal income tax rates as shown, what is the average tax rate for an individual
with taxable income of $118,700?
Taxable Income
Tax Rate
$
0
−
9,525
10
%
9,526
−
38,700
12
38,701
−
82,500
22
82,501
−
157,500
24
A) 24.00 percent
B) 22.36 percent
C) 19.00 percent
D) 21.94 percent
E) 21.00 percent
71) AC Motors is a sole proprietorship that has taxable income of $94,200. How much additional
tax will be owed if the taxable income increases by $14,300 based on the following tax rates?
Assume this is the sole source of income for the owner.
Taxable Income
Tax Rate
$
0
−
9,525
10
%
9,526
−
38,700
12
38,701
−
82,500
22
82,501
−
157,500
24
A) $3,862
B) $3,039
C) $3,406
D) $3,432
E) $3,678
72) Assume Juno's paid $368,060 in taxes on taxable income of $1,673,000 last year. This year,
the firm paid $401,545 in taxes on taxable income of $1,818,586. Assume the tax rates were the
same for both years. What are the marginal and average tax rates for this year?
A) 21 percent; 21 percent
B) 22 percent; 21 percent
C) 23 percent; 22 percent
D) 22 percent; 22 percent
E) 23 percent; 21 percent
73) A firm has $820 in inventory, $3,200 in fixed assets, $1,210 in accounts receivable, $890 in
accounts payable, and $360 in cash. What is the amount of the net working capital?
A) $4,700
B) $5,590
C) $3,600
D) $2,390
E) $1,500
74) A firm has $820 in inventory, $3,200 in fixed assets, $670 in accounts receivable, $390 in
accounts payable, $500 in long-term debt, and $360 in cash. What is the amount of the net
working capital?
A) $890
B) $960
C) $3,600
D) $3,340
E) $1,460
75) At the beginning of the year, a firm had total assets of $51,400, fixed assets of $32,800, and
current liabilities of $13,280. At the end of the year, the current assets are $14,800, the fixed
assets are $34,100, and the current liabilities are $14,210. What is the change in net working
capital for the year?
A) −$18,930
B) −$6,950
C) $11,470
D) −$4,730
E) $9,110
76) Blauser's started the year with $280 in cash, $924 in inventory, $361 in accounts payable,
$1,687 in equipment, and $414 in accounts receivable. At year's end, the firm had $311 in cash,
$1,594 in equipment, $1,003 in inventory, $426 in accounts receivable, and $398 in accounts
payable. What was the change in net working capital during the year?
A) −$860
B) $191
C) $85
D) −$94
E) −$206
77) Foxglove Interiors has net fixed assets of $38,215, long-term debt of $22,400, cash of $560,
accounts payable $4,611, inventory of $11,408, and accounts receivable of $3,462. How much
net working capital does the firm have?
A) $11,634
B) $26,634
C) $13,117
D) $10,819
E) $14,736
78) A debt-free firm has total sales of $22,980, costs of $14,715, and depreciation of $6,045.
What is the operating cash flow at a tax rate of 23 percent?
A) $1,465.20
B) $2,410.80
C) $8,340.00
D) $7,754.40
E) $9,019.80
79) Awnings Inc. has beginning net fixed assets of $234,100 and ending net fixed assets of
$243,600. Assets valued at $42,500 were sold during the year. Depreciation was $62,500. What
is the amount of net capital spending?
A) −$42,500
B) $9,500
C) $72,000
D) $53,000
E) $29,500
80) 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?
A) $440
B) −$40
C) $1,260
D) $1,180
E) −$360
81) Pete's Boats has beginning long-term debt of $840 and ending long-term debt of $790. The
beginning and ending total debt balances are $1,220 and $1,360, respectively. The interest paid is
$30. What is the amount of the cash flow to creditors?
A) $80
B) −$110
C) $110
D) $20
E) −$80
82) For the year, Peggy Grey's Cookies had net income of $8,110. The firm paid out 30 percent
of the net income to its shareholders as dividends and also paid $210 in interest. During the year,
the company repurchased $500 worth of common stock and borrowed $250. What is the cash
flow to stockholders?
A) $2,933
B) $1,893
C) $1,933
D) $2,433
E) $2,893
