11 Jan 10. Balance Sheet

Attempt 1

The biggest disadvantage of the sole proprietorship is:

unlimited liability.

double taxation.

total control.

limited access to capital.

The agency relationship in corporate finance refers to:

when the corporate hires an advertising agency to market their new product or service.

when the board of directors are elected to staggered terms.

when the board of directors oversee the CEO.

when the shareholders hire a manager to run their company.

Income Statement Barnyard, Inc.’s 2008 income statement lists the following income and expenses: EBIT = $505,000, Interest expense = $57,500, and Net income = $322,500. What is the 2008 Taxes reported on the income statement?

$447,500

$125,000

There is not enough information to calculate 2008 Taxes.

$182,500

Balance Sheet You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $690,000, Accounts receivable = $890,000, Inventory = $590,000, Accrued wages and taxes = $131,000, Accounts payable = $209,000, and Notes payable = $1,090,000. What is Cypress’s net working capital?

$1,430,000

$2,170,000

$3,600,000

$740,000

Which of the following is NOT a function of the board of directors?

Design compensation contracts for the CEO.

Provide reports to the auditors.

Hire the CEO.

Evaluate the CEO.

Statement of Cash Flows In 2008, Upper Crust had cash flows from investing activities of ?$225,000 and cash flows from financing activities of ?$155,000. The balance in the firm’s cash account was $95,000 at the beginning of 2008 and $110,000 at the end of the year. What was Upper Crust’s cash flow from operations for 2008?

$15,000

$380,000

$110,000

$395,000

When a firm alters its capital structure to include more or less debt (and, in turn, less or more equity), it impacts which of the following?

The residual cash flows available for stock holders

The number of shares of stock outstanding

The earnings per share (EPS)

All of the choices

Income Statement Bullseye, Inc.’s 2008 income statement lists the following income and expenses: EBIT = $903,000, Interest expense = $89,500, and Net income = $574,500. What is the 2008 Taxes reported on the income statement?

$239,000

There is not enough information to calculate 2008 Taxes.

$813,500

$328,500

The overall goal of the financial manager is to:

maximize shareholder wealth.

minimize total costs.

maximize net income.

maximize earnings per share.

Attempt 2

1. The agency relationship in corporate finance refers to:

when the shareholders hire a manager to run their company.

when the board of directors oversee the CEO.

when the board of directors are elected to staggered terms.

when the corporate hires an advertising agency to market their new product or service.

2. Which of the following is NOT a function of the board of directors?

Provide reports to the auditors.

Design compensation contracts for the CEO.

Evaluate the CEO.

Hire the CEO.

3. The biggest disadvantage of the sole proprietorship is:

total control.

double taxation.

limited access to capital.

unlimited liability.

4. Statement of Cash Flows In 2008, Upper Crust had cash flows from investing activities of ?$270,000 and cash flows from financing activities of ?$163,000. The balance in the firm’s cash account was $86,000 at the beginning of 2008 and $118,000 at the end of the year. What was Upper Crust’s cash flow from operations for 2008?

$465,000

$118,000

$433,000

$32,000

5. Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period?

Income statement

Balance sheet

Statement of cash Flows

Statement of retained Earnings

6. Income Statement Bullseye, Inc.’s 2008 income statement lists the following income and expenses: EBIT = $903,500, Interest expense = $88,000, and Net income = $574,500. What is the 2008 Taxes reported on the income statement?

$329,000

$815,500

There is not enough information to calculate 2008 Taxes.

$241,000

7. When a firm alters its capital structure to include more or less debt (and, in turn, less or more equity), it impacts which of the following?

The residual cash flows available for stock holders

The number of shares of stock outstanding

The earnings per share (EPS)

All of the choices

8. Balance Sheet You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $520,000, Accounts receivable = $720,000, Inventory = $420,000, Accrued wages and taxes = $42,000, Accounts payable = $120,000, and Notes payable = $920,000. What is Cypress’s net working capital?

$578,000

$1,082,000

$1,660,000

$2,742,000

9. Income Statement Barnyard, Inc.’s 2008 income statement lists the following income and expenses: EBIT = $506,500, Interest expense = $48,000, and Net income = $327,000. What is the 2008 Taxes reported on the income statement?

There is not enough information to calculate 2008 Taxes.

$458,500

$131,500

$179,500

10. Balance Sheet Jack and Jill Corporation’s year-end 2009 balance sheet lists current assets of $246,000, fixed assets of $796,000, current liabilities of $193,000, and long-term debt of $296,000. What is Jack and Jill’s total stockholders’ equity?

$553,000

$1,042,000

$489,000

There is not enough information to calculate total stockholder’s equity.