Share
Explore BrainMass

Multiple Choice

1. Based on the information in the table, calculate the after tax cash flow from operations for 2002 (no assets were disposed of during the year, and there was no change in interest payable or taxes payable):
Jones Company
Financial Information
December 2001 December 2002

Net income $1,500 $3,000
Accounts receivable 750 750
Accumulated depreciation 1,125 1,500
Common stock 4,500 5,250
Paid-in capital 7,500 8,250
Retained earnings 1,500 2,250
Accounts payable 750 750
A $3,750
B $3,375
C $3,000
D $2,250
2. Corporations are allowed to deduct specific expenses for income tax purposes. Several of these expenditures are deductible but they are not cash expenses. Which of the following is not a cash expenditure but is still deductible for income tax purposes?
A Marketing expenses
B Payroll tax payments.
C Wages and salaries
D Depreciation expense
3 The quick ratio of a firm would be unaffected by which of the following?
A land held for investment is sold for cash
B equipment is purchased, financed by a long-term debt issue
C inventories are sold for cash
D inventories are sold on a short-term credit basis
4. Which of the following has the most significant influence on return on equity?
a Common dividends
b Principal payments
c Accruals
d Operating income
5. A firm has after-tax cash flow from operations equal to $100,000. Operating working capital increased by $20,000, and the firm purchased $30,000 of fixed assets. The firm's free cash flow (asset perspective) was:
a. $50,000
b. $90,000
c. $110,000
d. $150,000
e. None of the above
6. PDQ Corp. has sales of $3,000,000; the firm's cost of goods sold is $1,425,000; and its total operating expenses are $700,000. The firm's interest expense is $230,000, and the corporate tax rate is 40%. The firm paid dividends to preferred stockholders of $30,000, and the firm distributed $60,000 in dividend payments to common stockholders. What is PDQ's "Addition to Retained Earnings?"
a. $297,000
b. $327,000
c. $387,000
d. $477,000
7. Byron, Inc. has total current assets of $800,000; total current liabilities of $450,000; long-term assets of $300,000; and long-term debt of $200,000. How much is the firm's total equity?
a. $1,150,000
b. $ 150,000
c. $ 450,000
d. $ 750,000
8. Patti Corporation has current assets of $11,400, inventories of $4,000, and a current ratio of 2.6. What is Patti's acid test ratio?
a. 1.69
b. 0.54
c. 0.74
d. 1.35

Attachments

Solution Preview

Please see the attached file. All answers/explanations in blue

1. Based on the information in the table, calculate the after tax cash flow from operations for 2002 (no assets were disposed of during the year, and there was no change in interest payable or taxes payable):
Jones Company
Financial Information
December 2001 December 2002

Net income $1,500 $3,000
Accounts receivable 750 750
Accumulated depreciation 1,125 1,500
Common stock 4,500 5,250
Paid-in capital 7,500 8,250
Retained earnings 1,500 2,250
Accounts payable 750 750
A $3,750
B $3,375
C $3,000
D $2,250
The cash flow from operations is calculated as
Net Income 3,000
Add: Depreciation 375
Cash flow from operations 3,375
Depreciation is the change in accumulated depreciation
There is no change in accounts receivable and accounts payable

2. Corporations are allowed to deduct specific expenses for income tax purposes. Several of these expenditures are deductible but they are not cash expenses. Which of the following is not a ...

Solution Summary

The solution explains some multiple choice questions in finance

$2.19