Question 1

Holding all other things constant,which of the following represents a cash outflow?

Accepted Answer

Acquiring inventory requires a cash payment, thereby representing a cash outflow.

Answer: D 
 Increasing accounts payable is a liability account, which means that the company has not yet paid for the expenses incurred, but will do so in the future, thereby representing a cash outflow in the future.

Question 2

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-What is Bavarian Sausage,Inc.'s quick ratio?

Accepted Answer

(CA-INV)/CL
175/310=.5645

Question 3

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-Calculate Bavarian Sausage,Inc.'s inventory turnover.

Accepted Answer

Inv.Turn=CGS/Inv=215/225=.96

Question 4

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-What is Bavarian Sausage,Inc.'s net profit margin?

Accepted Answer

NPM=NI/Sales=126/525=.24

Question 5

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-Calculate Bavarian Sausage,Inc.'s return on assets.

Accepted Answer

ROA=NI/TA=126/925=.1362

Question 6

NARRBEGIN: Tax table
Tax Table
 
-Refer to Tax Table.First Watch,Inc.has a pretax income of $3,755,250.What is the company's average tax rate?

Accepted Answer

The average tax rate is determined by dividing the total tax paid by the total income. Given the specific income amount, the tax rate applicable from the tax table would be 34%. This is because corporate tax rates are typically structured in brackets, and a pretax income of $3,755,250 would fall into the bracket taxed at a 34% rate according to common tax tables for corporations.

Question 7

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-Bavarian Sausage,Inc.has 100,000 shares of common stock outstanding,but no preferred stock.The current price of Bavarian's common stock is $15.What is the company's P/E-ratio?

Accepted Answer

P/E=Price/EPS
EPS=Earnings Av.Shareholders/# Shares Outstanding
EPS=126,000/100,000=1.26
P/E=15/1.26=11.90

Question 8

If you only knew a company's total assets and total debt,which item could you easily calculate?

Accepted Answer

The easily calculable item given total assets and total debt is total equity. This is because the formula for total equity is Total assets - Total Debt.

Question 9

You have the following information about a firm: total asset = $350,000; common stock equity = $175,000; ROE = 12.5%.What is the firm's earnings available for common stockholders?

Accepted Answer

.125*175,000=21,875

Question 10

How do we calculate a company's operating cash flow?

Accepted Answer

Operating cash flow is calculated as EBIT (Earnings Before Interest and Taxes) minus taxes plus depreciation. This formula adjusts the company's earnings for the effects of non-cash expenses (like depreciation) and taxes to reflect the cash generated from operational activities.

Question 11

Which of the following is a liquidity ratio?

Accepted Answer

The quick ratio is a liquidity ratio that measures a company's ability to meet its short-term obligations with its most liquid assets. Choice B, P/E ratio, is a valuation ratio and not a liquidity ratio. Choice C, inventory turnover, is an efficiency ratio that measures how efficiently a company's inventory is turned into sales. Choice D, equity multiplier, is a leverage ratio that measures the amount of a company's assets that have been financed by debt.

Question 12

NARRBEGIN: Tax table
Tax Table
 
-Refer to Tax Table.First Watch,Inc.has a pretax income of $3,755,250.What is the company's tax liability?

Accepted Answer

Tax on excess over 335,000 => (3,755,250-335,000)*.34=1,162,885
Tax = 1,162,885+91,650+8,500+6,200+7,500=1,276,785

Question 13

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-What is Bavarian Sausage,Inc.'s debt-equity ratio?

Accepted Answer

LTD/Eq.=115/(350+150)=.23

Question 14

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-Calculate Bavarian Sausage,Inc.'s return on equity.

Accepted Answer

126/(150+350)=.2520

Question 15

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-What is Bavarian Sausage,Inc.'s average collection period?

Accepted Answer

ACP=AR/ADS
ADS=SALES/365==>525/365=1.4384
ACP=125/1.4384=86.90

Question 16

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-What is Bavarian Sausage,Inc.'s operating cash flow?

Accepted Answer

245(1-.4)+65=212

Question 17

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-If a company's net profit margin is 5% and its total asset turnover is 3.5,what is its ROA?

Accepted Answer

ROA=Net profit margine * Invintory turnover
ROA=.05*3.5=.1750

Question 18

Which of the following items can be found on an income statement?

Accepted Answer

Sales are a revenue item and are typically included on an income statement to show the amount of money a company has made during a given period of time. Accounts receivable and inventory are balance sheet items, and long-term debt is a liability item that is also typically found on a balance sheet.

Question 19

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-What is Bavarian Sausage,Inc.'s times interest earned ratio?

Accepted Answer

time interest earned=EBIT/Interest=245/35=7.00

Question 20

NARRBEGIN: Bavarian Sausage,Inc.
Bavarian Sausage,Inc.
Bavarian Sausage,Inc.posted the following balance sheet and income statement.
  
-If Bavarian Sausage,Inc.has 100,000 shares outstanding,what is the book value per share?

Accepted Answer

BV/Share=(350+150)/100=5.00

Quiz 2: Financial Statement and Cash Flow Analysis

Holding all other things constant,which of the following represents a cash outflow?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -What is Bavarian Sausage,Inc.'s quick ratio?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -Calculate Bavarian Sausage,Inc.'s inventory turnover.

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -What is Bavarian Sausage,Inc.'s net profit margin?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -Calculate Bavarian Sausage,Inc.'s return on assets.

NARRBEGIN: Tax table Tax Table -Refer to Tax Table.First Watch,Inc.has a pretax income of $3,755,250.What is the company's average tax rate?

If you only knew a company's total assets and total debt,which item could you easily calculate?

You have the following information about a firm: total asset = $350,000; common stock equity = $175,000; ROE = 12.5%.What is the firm's earnings available for common stockholders?

How do we calculate a company's operating cash flow?

Which of the following is a liquidity ratio?

NARRBEGIN: Tax table Tax Table -Refer to Tax Table.First Watch,Inc.has a pretax income of $3,755,250.What is the company's tax liability?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -What is Bavarian Sausage,Inc.'s debt-equity ratio?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -Calculate Bavarian Sausage,Inc.'s return on equity.

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -What is Bavarian Sausage,Inc.'s average collection period?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -What is Bavarian Sausage,Inc.'s operating cash flow?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -If a company's net profit margin is 5% and its total asset turnover is 3.5,what is its ROA?

Which of the following items can be found on an income statement?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -What is Bavarian Sausage,Inc.'s times interest earned ratio?

NARRBEGIN: Bavarian Sausage,Inc. Bavarian Sausage,Inc. Bavarian Sausage,Inc.posted the following balance sheet and income statement. -If Bavarian Sausage,Inc.has 100,000 shares outstanding,what is the book value per share?