Question 1

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

Accepted Answer

Financial professionals prefer to focus on an accounting approach that focuses on current and prospective cash flows because it provides a more accurate picture of a company's financial health and performance. This approach helps in decision making activities such as budgeting, forecasting, and investing. Governmental accounting methods, international accrual accounting standards, or economically based accruals focus on different aspects of accounting and may not be as relevant or useful for financial professionals.

Question 2

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 3

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 4

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 5

Generally accepted accounting principles are developed by

Accepted Answer

Generally accepted accounting principles (GAAP) are developed by the Financial Accounting Standards Board (FASB), an independent organization funded by private sector businesses. The Securities and Exchange Commission (SEC) can influence GAAP through its oversight role, but it does not directly develop them. Congress and the New York Stock Exchange (NYSE) also do not have a role in developing GAAP.

Question 6

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

Question 7

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 company's earnings that have been retained and reinvested in the business rather than distributed as dividends to shareholders. This amount is reported as a component of shareholder's equity on the balance sheet.

Question 8

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 9

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 10

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 11

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 refer to the Tax Table provided. Based on the taxable income of $325,000, we see that the corresponding tax amount is $100,477.50. To find the marginal tax rate, we need to see how much the tax amount would increase if the taxable income increased by $1. The next bracket in the Tax Table is for taxable income between $321,450 to $408,200, where the tax amount is $108,421.25. Therefore, an additional $1 of taxable income would result in an additional tax of $6,943.75 ($108,421.25 - $100,477.50). This means that the marginal tax rate is 39%; the amount by which the tax increases when the taxable income increases by $1.

Question 12

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 13

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

Accepted Answer

The statement of cost of goods sold is not specifically required by the SEC, although it may be included in the company's financial statements. The SEC requires publicly traded firms to submit financial statements that include a balance sheet, income statement, statement of changes in equity, and statement of cash flows.

Question 14

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 15

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 16

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 17

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 18

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 19

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 20

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

Quiz 2: Financial Statement and Cash Flow Analysis