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Shareholders’ equity:
Correct answer(s):
- represents the residual value of a firm.
Which one of the following statements related to liquidity is correct?
Correct answer(s):
- Liquid assets are valuable to a firm.
Which one of the following represents the most liquid asset?
Correct answer(s):
- $100 of inventory that is sold today for $100 cash
Which one of the following accounts is the most liquid?
Which one of the following statements concerning net working capital is correct?
Correct answer(s):
- Net working capital increases when inventory is sold for cash at a profit.
Which one of the following statements concerning net working capital is correct?
Correct answer(s):
- A decrease in the cash balance also decreases net working capital.
Which one of the following will increase the value of a firm’s net working capital?
Correct answer(s):
- selling inventory at a profit
Which one of the following is included in a firm’s market value but yet is excluded from the firm’s accounting value?
Correct answer(s):
- good reputation of the company
Which one of the following is classified as an intangible fixed asset?
Correct answer(s):
- trademark
Cash flow to stockholders is defined as:
Correct answer(s):
- dividend payments less net new equity raised.
The cash flow related to interest payments less any net new borrowing is called the:
Correct answer(s):
- cash flow to creditors.
Cash flow from assets is also known as the firm’s:
Correct answer(s):
- free cash flow.
Which term relates to the cash flow which results from a firm’s ongoing, normal business activities?
Correct answer(s):
- operating cash flow
The cash flow of a firm which is available for distribution to the firm’s creditors and stockholders is called the:
Correct answer(s):
- cash flow from assets.
The ____ tax rate is equal to total taxes divided by total taxable income.
Correct answer(s):
- average
The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.
Correct answer(s):
- marginal
Non cash items refer to:
Correct answer(s):
- expenses which do not directly affect cash flows.
Which one of the following is the financial statement that summarizes a firm’s revenue and expenses over a period of time?
Correct answer(s):
- income statement
The common set of standards and procedures by which audited financial statements are prepared is known as the:
Correct answer(s):
- Generally Accepted Accounting Principles.
Net working capital is defined as:
Correct answer(s):
- current assets minus current liabilities.