Corporate Finance Quiz
Corporate Finance – Chapter 2 – Long Quiz 1
1) Marvelous Entertainment Group, Inc. had net income of $32.7 million in 2005. The firm paid no dividends. If there were no further changes to the stockholders ' equity accounts, then _____ by $32.7 million. [ ] common stock must have increased
√ [ ] retained earnings must have increased [ ] total stockholders ' equity must have decreased [ ] capital surplus must have decreased [ ] the market value of the firm 's stock must have decreased
2) Last year, Eddie 's, Inc. had an operating cash flow of $284,500. The net fixed asset account declined by $8,000 and the depreciation expense was $13,000. Also during the year, net working capital increased from $16,500 to $18,000. What is the company 's cash flow from assets? [ ] $262,000
√ [ ] $278,000 [ ] $281,000 [ ] $288,000 [ ] $301,000
3) Which of the following is a (are) component(s) of cash flow to creditors?
I. interest paid
II. net new borrowing
III. dividends paid [ ] I only [ ] II only
√ [ ] I and II only [ ] I and III only [ ] II and III only
4) The balance sheet is a financial statement summarizing a firm 's performance over a period of time. [ ] True
√ [ ] False
5) Sales are $16,500, cost of goods sold is $10,350, operating expenses are $3,118, depreciation is $1,120, and interest expense is $900. The tax rate is 34 percent. Given this information, what is the amount of the operating cash flow? [ ] $667.92 [ ] $1,912.00 [ ] $2,201.12 [ ] $2,381.92
√ [ ] $2,687.92
6) Last year the operating cash flow for JBC Inc. was positive while total cash flow from assets was negative. Based on this information, you know that: [ ] the firm is in financial distress. [ ] this is certainly good news, because the firm is investing a lot of cash in new projects. [ ] cash flow to stockholders is also negative. [ ] the firm 's net income for the year was
1) Marvelous Entertainment Group, Inc. had net income of $32.7 million in 2005. The firm paid no dividends. If there were no further changes to the stockholders ' equity accounts, then _____ by $32.7 million. [ ] common stock must have increased
√ [ ] retained earnings must have increased [ ] total stockholders ' equity must have decreased [ ] capital surplus must have decreased [ ] the market value of the firm 's stock must have decreased
2) Last year, Eddie 's, Inc. had an operating cash flow of $284,500. The net fixed asset account declined by $8,000 and the depreciation expense was $13,000. Also during the year, net working capital increased from $16,500 to $18,000. What is the company 's cash flow from assets? [ ] $262,000
√ [ ] $278,000 [ ] $281,000 [ ] $288,000 [ ] $301,000
3) Which of the following is a (are) component(s) of cash flow to creditors?
I. interest paid
II. net new borrowing
III. dividends paid [ ] I only [ ] II only
√ [ ] I and II only [ ] I and III only [ ] II and III only
4) The balance sheet is a financial statement summarizing a firm 's performance over a period of time. [ ] True
√ [ ] False
5) Sales are $16,500, cost of goods sold is $10,350, operating expenses are $3,118, depreciation is $1,120, and interest expense is $900. The tax rate is 34 percent. Given this information, what is the amount of the operating cash flow? [ ] $667.92 [ ] $1,912.00 [ ] $2,201.12 [ ] $2,381.92
√ [ ] $2,687.92
6) Last year the operating cash flow for JBC Inc. was positive while total cash flow from assets was negative. Based on this information, you know that: [ ] the firm is in financial distress. [ ] this is certainly good news, because the firm is investing a lot of cash in new projects. [ ] cash flow to stockholders is also negative. [ ] the firm 's net income for the year was