102.
All of the following are cash flows from financing EXCEPT a(n):
103.
Cash flows available to pay the firm’s stockholders and debt holders after the firm has
made the necessary working capital investments, fixed asset investments, and developed
the necessary new products to sustain the firm’s ongoing operations is referred to as:
104.
Investment in operating capital is:
105.
A firm had EBIT of $1,000, paid taxes of $225, expensed depreciation at $13, and its gross
fixed assets increased by $25. What was the firm’s operating cash flow?
106.
Which of the following is an example of a capital structure?
107.
Lemmon Inc. lists fixed assets of $100 on its balance sheet. The firm’s fixed assets have
recently been appraised at $140. The firm’s balance sheet also lists current assets at $15.
Current assets were appraised at $16.50. Current liabilities book and market values stand
at $12 and the firm’s long-term debt is $40. Calculate the market value of the firm’s
stockholders’ equity.
108.
A firm has operating income of $1,000, depreciation expense of $185, and its investment in
operating capital is $400. The firm is 100 percent equity financed and has a 35 percent tax
rate. What is the firm’s operating cash flow?
109.
All of the following are reasons that one should be cautious in interpreting financial
statements EXCEPT:
110.
Which of the following statements is correct?
111.
ABC Inc. has $100 in cash on its balance sheet at the end of 2009. During 2010, the firm
issued $450 in common stock, reduced its notes payable by $40, purchased fixed assets in
the amount of $750, and had cash flows from operating activities of $315. How much cash
did ABC Inc. have on its balance sheet at the end of 2010?
Topic: Statement of Cash Flows
112.
LLV Inc. originally forecasted the following financial data for next year: sales = $1,000,
cost of goods sold = $675, and interest expense = $90. The firm believes that COGS will
always be 67.5 percent of sales. Due to increased global demand, the firm is now
projecting that sales will be 20 percent higher than the original forecast. What is the
additional
net income (as compared to the original forecast) the firm can expect assuming
a 35 percent tax rate?
113.
LLV Inc. originally forecasted the following financial data for next year: sales = $1,000,
cost of goods sold = $710, and interest expense = $95. The firm believes that COGS will
always be 71 percent of sales. Due to pressure from shareholders, the firm wants to
achieve a net income of $150. Assuming the interest expense will remain the same, how
large must sales be to achieve this goal? Assume a 35 percent tax rate.
114.
A firm has sales of $690, EBIT of $300, depreciation of $40, and fixed assets increased by
$265. If the firm’s tax rate is 40 percent and there were no increases in net operating
working capital, what is the firm’s free cash flow?
115.
GW Inc. had $800 million in retained earnings at the beginning of the year. During the year,
the firm paid $0.75 per share dividend and generated $1.92 earnings per share. The firm
has 100 million shares outstanding. At the end of year, what was the level of retained
earnings for GW?
Essay Questions
116.
Statement of Cash Flows Use the following balance sheet and income statement to
construct a statement of cash flows for Betty’s Bakery Corp.
117.
When might earnings management become an ethical consideration?
118.
How do taxes influence how corporate managers and investors structure transactions and
capitalize their companies?
119.
How would you explain to a friend why market value of a firm is more important to an
investor than book value of the firm?
Topic: Book Value versus Market Value
120.
What are free cash flows for a firm? What does it mean when a firm’s free cash flow is
negative?
121.
What are the costs and benefits of holding liquid securities on a firm’s balance sheet?