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The cash generated from a firm's normal business activities is called:


A) Financing cash flow.
B) Net income.
C) Gross profit.
D) Operating cash flow.
E) Free cash flow.

F) A) and E)
G) A) and D)

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What is the operating cash flow for 2018? A) $381.90 B) $396.10 C) $401.90 D) $440.10 E) $451.90 What is the operating cash flow for 2018?


A) $381.90
B) $396.10
C) $401.90
D) $440.10
E) $451.90

F) A) and E)
G) All of the above

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The earnings per share will:


A) Decrease if the tax rate decreases.
B) Remain constant if the number of shares outstanding is increased.
C) Decrease anytime the revenue of a firm decreases.
D) Decrease only if the net income of a firm decreases.
E) Decrease if the number of shares outstanding is increased.

F) All of the above
G) A) and B)

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The owner of Fred's Electronics is trying to sell the business. The company built a building four years ago at a cost of $2.2 million. The building is currently appraised at $2.46 million. The firm's equipment originally cost $1.2 million and is currently valued at $700,000. The inventory is listed on the statement of financial position at $150,000 but is only worth $125,000. The owner expects to collect 90 % of the $300,000 in accounts receivable. The firm has $14,000 in cash and has total debt of $3.1 million. What is the market value of this firm?


A) $455,000
B) $469,000
C) $499,000
D) $504,000
E) $524,000

F) A) and B)
G) B) and D)

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How will differentiating sources and uses of cash from past projects assist the manager in future projects?


A) Better predicting cash flows.
B) Perfectly timing cash flows.
C) Determining cash flows with perfect precision.
D) Identifying cash flows immediately.
E) Estimating stock price.

F) D) and E)
G) B) and E)

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Which one of the following will increase earnings per share, all else held constant?


A) A decrease in the number of shares outstanding.
B) An increase in wages paid to employees.
C) A decrease in sales of the firm.
D) An increase in marginal tax rates.
E) An increase in depreciation expense.

F) B) and C)
G) A) and D)

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Dale Corporation had beginning fixed assets of $3,500 an ending fixed asset balance of $4,800 invested and depreciation expense of $200. Given this information, determine the net investment in fixed assets.


A) $1,200
B) $1,300
C) $1,400
D) $1,500
E) $1,600

F) B) and E)
G) A) and E)

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Which of the following are included in current assets?


A) Inventory
B) Equipment
C) Depreciation
D) Accounts payable
E) Shareholders' equity

F) A) and B)
G) A) and C)

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Realized capital gains is best described as:


A) The taxable difference between adjusted cost of disposal and UCC, when UCC is smaller.
B) Using a year's capital losses to offset capital gains in past years.
C) Using a year's capital losses to offset capital gains in future years.
D) Total installed cost of capital acquisitions minus adjusted cost of any disposals within an asset pool.
E) The increase in value of an investment, when converted to cash.

F) B) and E)
G) A) and B)

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What is the operating cash flow for the year 2018? A) $361 B) $995 C) $1,725 D) $1,911 E) $2,455 What is the operating cash flow for the year 2018? A) $361 B) $995 C) $1,725 D) $1,911 E) $2,455 What is the operating cash flow for the year 2018?


A) $361
B) $995
C) $1,725
D) $1,911
E) $2,455

F) A) and E)
G) A) and B)

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Which one of the following situations will cause cash flow to creditors to be negative?


A) When there are no new loans and the interest paid exceeds the principal repaid on a loan
B) When the amount of a new loan exceeds both the interest and principal payments made
C) When the amount of the loan paid off exceeds both the amount of a new loan plus the interest paid
D) When the rate of interest on all outstanding loans is decreased
E) When there are no new loans and the current loan is paid off in full

F) A) and C)
G) A) and E)

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Cash flow to shareholders is best described as:


A) A firm's interest payments to creditors less net new borrowings.
B) Dividends paid out by a firm less net new equity raised.
C) Cash flow to shareholders is also referred to as free cash flow.
D) The net difference between total assets and total liabilities.
E) The sum of cash flow to bondholders and shareholders

F) B) and D)
G) All of the above

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Shareholders' equity in a firm is $500. The firm owes a total of $400 of which 75 percent is payable this year. The firm has net fixed assets of $600. What is the amount of the net working capital?


A) -$200
B) -$100
C) $0
D) $100
E) $200

F) D) and E)
G) B) and C)

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At the beginning of the year, a firm has current assets of $91,807 and current liabilities of $102,343. At the end of the year, the current assets are $89,476 and the current liabilities are $92,638. What is the change in net working capital?


A) -$13,698
B) -$8,407
C) $2,109
D) $7,374
E) $11,991

F) C) and E)
G) A) and D)

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What is the operating cash flow for 2018? A) $872 B) $2,013 C) $2,413 D) $2,688 E) $2,813 What is the operating cash flow for 2018? A) $872 B) $2,013 C) $2,413 D) $2,688 E) $2,813 What is the operating cash flow for 2018?


A) $872
B) $2,013
C) $2,413
D) $2,688
E) $2,813

F) A) and E)
G) A) and C)

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Which of the following financial statement items is generally considered the most liquid?


A) Intangible assets.
B) Net fixed assets.
C) Long-term debt.
D) Patents and trademarks.
E) Accounts receivable.

F) C) and D)
G) A) and B)

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What is the amount of dividends paid in 2018 ($ in millions) ? A) $40 B) $370 C) $410 D) $660 E) $700 What is the amount of dividends paid in 2018 ($ in millions) ? A) $40 B) $370 C) $410 D) $660 E) $700 What is the amount of dividends paid in 2018 ($ in millions) ?


A) $40
B) $370
C) $410
D) $660
E) $700

F) A) and E)
G) A) and C)

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If the market value of an asset exceeds the book value of that asset, then the sale of the asset will:


A) Generate taxable income.
B) Result in a capital loss.
C) Cause a cash outflow for the firm.
D) Cause net profits to decline.
E) Cause operating cash flows to decrease.

F) A) and C)
G) A) and D)

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Book value:


A) Is equivalent to market value for firms with fixed assets.
B) Is based on historical cost.
C) Generally tends to exceed market value when fixed assets are included.
D) Is more of a financial than an accounting valuation.
E) Is adjusted to market value whenever the market value exceeds the stated book value.

F) A) and C)
G) A) and E)

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Cash flow from assets is equal to:


A) Operating cash flow minus net new equity plus net new borrowing.
B) Cash flow to creditors minus cash flow to stockholders.
C) Operating cash flow minus the change in net working capital minus net capital spending.
D) Operating cash flow plus net capital spending minus the change in net working capital.
E) Operating cash flow minus depreciation plus taxes.

F) A) and B)
G) A) and C)

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