Corporate Finance Quiz

3. Was cash flow from operations greater than or less than net income? Explain in detail the major reasons for the difference between these two figures.

For an individual who pays personal income taxes at a rate of 30 percent, which of the following statements is most correct?

Accounts receivable (net) increased by $500,000 during the year. This increase has what effect on cash flow?

There are a couple of concerns with Competition Bikes Inc., ProForma for year 9. The first concern is the amount of money that is allocated to research and development. For the previous three years, they have been all over the board with their budgets. The sixth year was $71,460, the seventh year was $98,280, and the eight year was $82,284. This is concerning that the budget has fluctuated so much. In the ninth year they have allocated $85,861. This budget line item should be analyzed so there is not so much variance in the budget between year to year.

| Income Summary 280,000 Retained Earnings 280,000 Ending balance $300,000 Beginning balance 100,000 Difference 200,000 Cash dividends $40,000 Stock dividends 40,000 80,000 $280,000

By using the consolidated income statements, balance sheet and cash flow statement, we can assess the company’s financial position. On the income statement, the company’s operation revenue increased by 4.5% ($393.4 million) from year 2006 while its operating income decreased by $65.1 million in the same period. Without considering the net-cash settlement feature expense recorded in 2007, operating income increased $103.6 million. Even though including the net-cash settlement feature

1. Barker Corp. has a beta of 1.10, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Barker's required rate of return?

20. During the current year, Jacob, Alicia and Shawn, who are partners in the JAS Company, had average capital balances of $57,000, $49,000 and $64,000, respectively. The partners share profits and losses by allowing a 12% return on average capital, with any remaining income or loss divided in a ratio of 5:3:2. If the company's income for the current year was $73,800, Shawn's capital account would increase by:

Abacus Corp. will pay dividends of $2.25, $2.95 and $3.15 for the next three years. After three years, the firm will grow at a constant rate of 4 percent. If the required rate of return is 14.5 percent, what is the current value of the stock?

- A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,200 and other assets of $10,800. Equity is worth $12,000. The firm has 750 shares of stock outstanding and net income of $775. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?

10. In class we briefly discussed Micro Finance institutions (MFIs). What markets do MFIs typically serve? What are the major criticisms of MFIs? What financial institutions in the US closely resemble MFIs?

During 2012 sales on account were $145,000 and collections on account were $86,000. Also, during 2012 the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $54,000. The change in the cash realizable value from the balance at 12/31/11 to 12/31/12 was (Points : 2)

* The company decided to change from FIFO to LIFO inventory pricing, which resulted in a loss of $90,000 (net of tax).

One of the primary financial results is the increase in net income from fiscal year 2014 to fiscal year 2015. The percentage increased 2% from $337.6 million to $344.2 million, which may be accounted for by a liquidation of assets, due to the sale of the plane as well as an increase in sales. This change is verified and observed by seeing that, according to the Executive Summary, net sales also increased 10% from $6,213.2 million to $6,814 million. This was primarily due to store expansion and same store sales.

April balance of the $4,000, so beginning cash was $4,000.Carmen got cash sales revenue $7,400, less paid cash $1,510 for employee wages, less paid replenishment inventory $2,900,less rent for three-month $1,800, less paid cash $1,800 for sewing machine. Finally the ending cash was $3,390. According to above details , the statement of cash flow for the three-month operations of Ribbons an’ Bows, Inc., can be created as follows.