sample_1_ans__sheet

sample_1_ans__sheet - 1. What is sales revenue, minus cost...

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1. What is sales revenue, minus cost of goods sold and operating expenses, known as for income statement purposes? a. Net profit b. Retained earnings c. Net income available to preferred shareholders d. EBIT ANSWER: d DIFFICULTY: Moderate KEYWORDS: income statement structure, net income 2. Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)? a. Net profit after tax but before dividends b. Net working capital c. Operating income d. Income before tax ANSWER: c DIFFICULTY: Moderate KEYWORDS: operating income 3. Fixed assets includes which of the below? a. Inventory b. Patents c. Land d. Copyrights ANSWER: c DIFFICULTY: Easy KEYWORDS: fixed assets 4. How does "free cash flow" differ from net profit? a. It is determined by accrual basis accounting. b. It takes into consideration a firm’s ongoing investment in working capital and fixed assets. c. It ignores depreciation and taxes. d. It is less expensive. ANSWER: b DIFFICULTY: Moderate KEYWORDS: free cash flow 5. Which of the following items is part of the computation of net operating working capital for purposes of determining free cash flow? a. Accounts payable b. Fixed assets c. Interest expense d. Dividend payments ANSWER: a DIFFICULTY: Moderate
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KEYWORDS: net operating working capital 6. Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm’s gross profit? a. $18,000,000 b. $15,225,000 c. $5,000,110 d. $6,632,000 ANSWER: b DIFFICULTY: Moderate KEYWORDS: gross profit 7. Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm’s income before tax? a. $4,360,000 b. $750,000 c. $10,865,000 d. $25,115,000 ANSWER: a DIFFICULTY: Moderate KEYWORDS: earnings before tax 8. Your firm has the following balance sheet statement items: total current liabilities of $805,000; total assets of $2,655,000; fixed and other assets of $1,770,000; and long-term debt of $200,000. What is the amount of the firm’s net working capital? a. $25,000 b. $325,000 c. $770,000 d. $80,000 ANSWER: d DIFFICULTY: Moderate KEYWORDS: net working capital 9. Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $8,750,000; cost of goods sold of $35,025,000; depreciation and amortization of $1,365,000; and interest expense of $750,000. For purposes of determining free cash flow, what is the amount of the firm’s after-tax cash flow from operations? a. $255,223
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sample_1_ans__sheet - 1. What is sales revenue, minus cost...

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