Chapter 2: Financial statement and cash flow analysis
Quiz
The number of shares outstanding multiplied by the original selling price of the shares, net of par value is:
the value of common stock outstanding.
the retained earnings attributable to common stock.
paid-in capital in excess of par.
none of the above.
In the United States, who is responsible for regulating the financial statements required by publicly traded companies?
Professional Accounting Oversight Board
Financial Accounting Standards Board
Securities and Exchange Commission
Internal Revenue Service
If free cash flow equals operating cash flow then:
ΔFA = (Δ CA - Δ A/P - Δ Accruals)
ΔFA = - (Δ CA - Δ A/P - Δ Accruals)
ΔFA + (Δ CA - Δ A/P - Δ Accruals) = 1
none of the above
The average collection period for Meiter Co. is 36.5. If the firm's accounts receivable is €500,000, then what was the firm's total sales?
€13,699
€18,250
€5,000,000
€18,250,000
From a financial professional's perspective, which approach to accounting is more appropriate?
cash flow approach
GAAP
time of sale approach
time of costs approach
The Inventory turnover of LordRings, Ltd was 6.67 last year. If the firm's cost of goods sold was €1,000,000 then was is the firm's ending inventory?
€6,670,000
€1,000,000
€149,925
€66,700
Heavy Equipment Co. had sales last year of €100,000,000 with gross fixed assets equal to €20,000,000. If the firm has accumulated depreciation of €5,000,000 then what is the firm's fixed asset turnover?
5.00
6.67
20.00
25.00
Borrow Little Co. had earnings before interest and taxes of €10,000,000. If Borrow Little can borrow funds at a cost of 8%, then what is the maximum amount of borrowing it could have had last year if it must maintain a minimum times interest earned of 15?
€8,333,333
€6,666,666
€800,000
there is not enough information to solve the problem
Buy on Credit, Ltd had purchases last year of €3,000,000 and its accounts payable is currently €50,000. What is Buy on Credit's average payment period?
1.6438
6.000
6.083
there is not enough information
Shrew Lipbalm Co. had earnings before interest and taxes of €700,000 and depreciation expense of €150,000 last year. What were Shrew's operating cash flows for the year if it was subject to a 40% tax rate? Assume that earnings before interest and taxes are the same as earnings before taxes for Shrew.