Question 1

You have the following information about a company: quick ratio = 0.9,inventory = $50,000 and current assets = $200,000.What is the company's current ratio?

Accepted Answer

Current Ratio = CA/CL
Quick Ratio = (CA-Inv)/CL
.9=(200-50)/CL
CL=166.67
Current Ratio=200/166.67=1.20

Question 2

Financial professionals prefer to focus on an accounting approach that focuses on

Accepted Answer

Financial professionals prefer to focus on current and prospective cash flows because cash is the lifeblood of any business. Understanding the timing and amount of cash inflows and outflows is critical to making informed financial decisions. While economically based accruals are also important for understanding a company's financial health, they are often more complex and require a higher level of accounting expertise. Governmental accounting methods and international accrual accounting standards may be relevant in certain contexts, but they are not typically the primary focus of financial professionals.

Question 3

A company has sales of $1,000,000,cost of goods sold of $700,000,depreciation expenses of $250,000 and interest expenses of $55,000.If the company's tax rate is 34% and the income statement is complete,what is this firm's operating cash flow?

Accepted Answer

(1,000 -700 - 250)*(1-.34)+ 250 = 283

Question 4

NARRBEGIN: Tax table
Tax Table
 
-Refer to Tax Table.Bavarian Sausage,Inc.has a pretax income of $325,000.What is the company's tax liability?

Accepted Answer

Tax on excess of 100,00=> (325,000-100,00)*.39=87,750
Tax = 87,75+8,500+6,250+7,500=110,000

Question 5

A company has a total asset turnover of 2 and sales of $500,000.What is the company's total assets?

Accepted Answer

500/2=250

Question 6

NARRBEGIN: Tax table
Tax Table
 
-Refer to Tax Table.Bavarian Sausage,Inc.has a pretax income of $325,000.What is the company's average tax rate?

Accepted Answer

Tax on excess of 100,00=> (325,000-100,00)*.39=87,750
Tax = 87,75+8,500+6,250+7,500=110,000
110/325=.3385

Question 7

You have the following information about a company: quick ratio = 0.85,inventory = $125,000 and current assets = $375,000.What is the company's current ratio?

Accepted Answer

Current Ratio = CA/CL
Quick Ratio = (CA-Inv)/CL
.85=(375-125)/CL
CL=194
Current Ratio=375/194=1.28

Question 8

A company has an average collection period of 52 days and accounts receivables of $250,000.What are the company's annual sales?

Accepted Answer

Annual Sales/365 = Av.daily sales
AR = ACP * Av.daily sales
250,000 = 52 * (Annual sales/365)
Annual sales = 1,754,807

Question 9

Your company has an average collection period of 40 days and accounts receivables of $315,000.What are the company's annual sales?

Accepted Answer

Annual Sales/365 = Av.daily sales
AR = ACP * Av.daily sales
315,000 = 40 * (Annual sales/365)
Annual sales = 2,874,375

Question 10

Generally accepted accounting principles are developed by

Accepted Answer

Generally accepted accounting principles (GAAP) are developed by the Financial Accounting Standards Board (FASB), which is an independent, private-sector organization that sets accounting standards for public and private companies and not-for-profit organizations in the United States. The Securities and Exchange Commission (SEC) oversees the FASB, but does not develop GAAP. Congress does not develop GAAP either. The New York Stock Exchange (NYSE) is a stock exchange and does not develop GAAP.

Question 11

NARRBEGIN: Tax table
Tax Table
 
-Refer to Tax Table.Bavarian Sausage,Inc.has a pretax income of $325,000.What is the company's marginal tax rate?

Accepted Answer

To find the marginal tax rate, we need to look at the tax table provided. Based on the income of $325,000, the tax rate falls in the range of $217,850 to $372,950, with a tax rate of 39%. Therefore, the answer is B - 39%.

Question 12

A company has sales of $250,000,cost of goods sold of $50,000,depreciation expenses of $250,000.If the company's tax rate is 34% and the income statement is complete,what is this firm's operating cash flow?

Accepted Answer

(200*.66)+(250*.34)=217
alt
(250-50-250)*.66 + 250 =217

Question 13

A company has sales of $1,250,000,cost of goods sold of $750,000,depreciation expenses of $250,000 and interest expenses of $55,000.If the company's tax rate is 34% and the income statement is complete,what is this firm's operating cash flow?

Accepted Answer

(1,250 -750 - 250)*(1-.34)+ 250 = 415

Question 14

The balance sheet entry that represents the cumulative total of the earnings that a firm has reinvested since its inception is

Accepted Answer

Retained earnings represent the cumulative total of a firm's earnings that have been reinvested back into the company since its inception. This figure includes profits, losses, and dividends that have not been paid out to shareholders.

Question 15

In a given year a company decreased its inventory by $250,000,purchased $350,000 worth of fixed assets and took on a new $500,000 loan.What is the net change of the company's cash as a result of these transactions?

Accepted Answer

250-350+500=400

Question 16

In a given year a company decreased its inventory by $250,000,increased its accounts receivable by $50,000 and increased its accounts payable by $100,000.What is the net change of the company's cash?

Accepted Answer

250+50+100=400

Question 17

Given the following information,calculate the company's long-term debt.

Accepted Answer

Total Assets = 125+250=375
TA = TL + Equity
TL = CL + LTD
375 = 85 + LTD + 200
LTD = 90

Question 18

Which of the following statements is not required by the SEC for publicly traded firms?

Accepted Answer

While a statement of cost of goods sold is an important financial statement for a company, it is not explicitly required by the SEC for publicly traded firms. The other options listed (statement of retained earnings, statement of cash flows, and balance sheet) are all required by the SEC for publicly traded firms.

Question 19

Given the following information,calculate the company's Current Assets.

Accepted Answer

TL=CL+LTD+TE
TL=50+100+180=330
TA=TL
TA=CA+NFA
TA=CA+100
330=CA+100
CA=230

Question 20

Company X had sales of $120 with a cost of goods sold equal to 25% of sales.In addition,X had total other operating expenses of $50 with an interest expense of $20.If X pays a flat 40% of its pre-tax income in income taxes,what is X's net income?

Accepted Answer

(120-30-50-20)*.6=12

Quiz 2: Financial Statement and Cash Flow Analysis