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    Finance practice questions

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    11. Board Bagels, a small cafe in downtown Pittsburgh, had a net sales of $230,000 for the most recent fiscal year, 65% of which were eaten up by its costs. The firm had some baking equipment that cost $45,000 with a salvage value estimated at $5,000 and was being depreciated over 10 years using the straight-line method. Interest on accumulated loans amounted to $12,000 and the cafe had a net tax rate of 25%. What was it's net income?
    A. $48,375
    B. $17,625
    C. $48,000
    D. $160,500

    12. Old Company paid taxes of $ 20,000 and purchased equipment worth $ 25,000 during the year that ended June 30, 2008. The firm had net income of $400,000 during the year ended June 30, 2008. After paying out $25,000 in dividends, the balance went into retained earnings. If the firm's total retained earnings were $875,000, what was the level of retained earnings on its balance sheet on July 1, 2007?
    a) $ 480,000
    b) $ 520,000
    c) $ 920,000
    d) $ 500,000

    13. Johnson Corporation has announced that its net income for the year ended June 30, 2008, is $1,000,000. The company had an EBITDA of $ 4,900,000, and its depreciation and amortization expense was equal to $1,500,000. The companyÃ?¢â?¬â?¢s tax rate is 34 percent. What is the amount of interest expense for the Corporation?
    a) $ 1,590,749
    b) $ 1,884, 849
    c) $ 880, 659
    d) $ 1,489,500

    14. A market value balance sheet can provide:
    a) management with a more exact statement of the firmÃ?¢â?¬â?¢s net income
    b) investor's with a better understanding of the cost of the firmÃ?¢â?¬â?¢s assets
    c) misleading information on the earnings per share of most firms
    d) better information on the stockholder's equity

    15. Common-size financial statements include:
    I. balance sheets with contents divided by total assets
    II. income statements with contents divided by net sales or revenues
    III. cash flow statements with contents divided by depreciation and amortization

    A. I only
    B. II only
    C. I and II

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    Solution Preview

    11. Gross Profit = 230000*(1-65%) = 80,500

    Depreciation = (45000-5000)/10 = 4,000
    Loan = 12,000

    Income before taxes = 80500-4000-12000 ...

    Solution Summary

    The solution answers finance practice questions.