The current ratio is found by dividing current assets by ____________________.
An advantage of financing with debt rather than stock is that interest expense is
____________________ for tax purposes.
Sales discounts decrease the cost of inventory acquired.
McCullow Investment Group
One of the firm’s financial analysts is assessing the performance of three particular
companies whose cash flow statements for the last three years are presented below:
All amounts are in millions of dollars 2014 2013 2012
Company A
Net cash provided by operating activities $ 5,000 $4,000 $2,800
Net cash used by investing activities ($13,000) ($2,300) ($2,900)
Net cash provided by (used by) financing activities $ 8,000 ($
300) ($ 100)
Company B
Net cash provided by operating activities $ 2,000 $1,500 $1,000
Net cash used by investing activities ($ 2,200) ($1,400) ($ 700)
Net cash provided by (used by) financing activities $ 400 ($
30) ($ 100)
Company C
Net cash provided by operating activities $ 290 $ 210 $ 130
Net cash used by investing activities ($ 500) ($ 200) ($ 100)
Net cash provided by (used by) financing activities $ 250 $ 10
$ 5
Refer to McCullow Investment Group. Ignoring the differences in magnitude, comment
on the similarities and differences in the cash flows of the three companies.
Regency Lighting
The current assets section of the company’s two most recent balance sheets are
presented below:
2015 2014
Cash $ 37,500 $ 29,400
Accounts receivable, net 78,750 96,600
Inventory 104,100 126,700
Other current assets 9,200 7,750
Total current assets 229,550 260,450
Total Assets $1,325,000 $1,715,000
Refer to Regency Lighting. Complete a common size horizontal analysis of the current
assets section of the balance sheet for 2015. Your answers should be expressed as
percentages and rounded to one decimal place. Provide a short explanation of this
analysis.
8% Preferred Stock, $10 par, 10,000 shares authorized, 5,000 shares issued
and outstanding $50,000
Common Stock, $2 par, 25,000 shares authorized, 20,000 shares issued and
outstanding 40,000
Paid-in Capital in Excess of Par:
Preferred Stock 60,000
Common Stock 80,000
Total Capital Stock $230,000
The board of directors determined the total amount available for dividends in each year
from 2012 through 2014 as shown in the following table. Complete the table to indicate
the portion of the dividend allocated to preferred and common stockholders in each
year. Assume that the preferred stock is noncumulative and nonparticipating.
Amount Available
Year for Dividends Preferred Dividends Common Dividends
2012 $8,000
2013 $5,000
2013 $3,000
Refer to Rhodes Bakery. Calculate the following short-term liquidity ratios for 2015
and 2014: Current Ratio, Quick Ratio, Cash Ratio, and Operating Cash Flow Ratio.
Cash flows from operations were $75,500 and $50,500 for 2015 and 2014, respectively.
Round your answers to two decimal places. Comment on the company’s short-term
liquidity.
Refer to Accutemp Heating & Air. How much total interest revenue will the company
recognize over the term of the note?
When a company recognizes the portion of supplies used during a year, the effect is to
decrease net income.
Accumulated other comprehensive income is NOT considered to be a source of
stockholders’ equity.
The initial step in the recording process is sometimes referred to as journalizing.
A company’s bank statement balance shows that there is $4,190 in the checking account
at the end of the month. Comparing the company’s records with the bank statement
reveals several additional items, such as outstanding checks of $1,860, deposits in
transit of $2,080, an NSF check of $209, interest earned of $21.52, a bank service
charge of $40, and a check for $120 recorded twice by the company. Calculate the
adjusted cash balance for this checking account.
A primary advantage of the allowance method to account for bad debts is that it
supports the matching principle.
The three aspects of return on equity (ROE) recognized by DuPont analysis are the net
profit margin percentage, the ____________________ ratio, and leverage.