Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 2, Problem 21P
See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
- a. In what year was Mydeco’s net income the lowest?
- b. In what year did Mydeco need to reduce its cash reserves?
- c. Why did Mydeco need to reduce its cash reserves in a year when net income was reasonably high?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Which of the following would most likely signal that a company may be using aggressiveaccrual accounting policies to shift current expenses to later periods? Over the last fi veyear period, the ratio of cash fl ow to net income has:A . increased each year.B . decreased each year.C . fl uctuated from year to year.
Which option would not be revealed by a company's statement of cash flows?
Select one:
a. Whether the company has exceeded its overdraft limit during the year
b. How the company has managed its working capital over the last financial year
c. Whether the company has raised extra long-term funding during the year
d. Whether the company has paid a dividend during the year
Last year, National Co. reported negative net cash flow and negative free cash flow. However, its cash on the balance sheet increased. Which of the following could explain these changes in its cash position?
a. The company had a sharp increase in its depreciation and amortization expenses.
b. The company had a sharp increase in its inventories.
c. The company issued new common stock.
d. None of the choices
Chapter 2 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 2.1 - Prob. 1CCCh. 2.1 - Prob. 2CCCh. 2.2 - Prob. 1CCCh. 2.2 - Prob. 2CCCh. 2.2 - Prob. 3CCCh. 2.3 - What it is the difference between a firms gross...Ch. 2.3 - What is the diluted earnings per share?Ch. 2.4 - Prob. 1CCCh. 2.4 - Prob. 2CCCh. 2.5 - Prob. 1CC
Ch. 2.5 - Prob. 2CCCh. 2.6 - Why is EBITDA used to assess a firms ability to...Ch. 2.6 - Prob. 2CCCh. 2.6 - Prob. 3CCCh. 2.6 - Prob. 4CCCh. 2.7 - Describe the transactions Enron used to increase...Ch. 2.7 - Prob. 2CCCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Consider the following potential events that might...Ch. 2 - What was the change m Global Conglomerates book...Ch. 2 - Find online the annual 10-K report for Costco...Ch. 2 - In early 2012, General Electric (GE) had a book...Ch. 2 - In early-2015, Abercrombie Fitch (ANF) had a book...Ch. 2 - Prob. 10PCh. 2 - Suppose that in 2016, Global launches an...Ch. 2 - Find online the annual 10-K report for Costco...Ch. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Suppose a firms tax rate is 35%. a. What effect...Ch. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Prob. 22PCh. 2 - Can a firm with positive net income run out of...Ch. 2 - Suppose your firm receives a 5 million order on...Ch. 2 - Nokela Industries purchases a 40 million...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Find online the annual 10-K report for Costco...Ch. 2 - Prob. 28PCh. 2 - For fiscal year end 2015, Wal-Mart Stores, Inc....Ch. 2 - Prob. 30PCh. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - See Table 2.5 showing financial statement data and...Ch. 2 - Use the data in Problem 8 to determine the change,...Ch. 2 - You are analyzing the leverage of two firms and...Ch. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Prob. 41PCh. 2 - Prob. 42PCh. 2 - Consider a retailing firm with a net profit margin...Ch. 2 - Prob. 44PCh. 2 - Prob. 45P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Howe industries reported a positive cash flow from operations on its cash flow statement, yet cash on the balance sheet decreased relative to the prior year's balance. Which of the following could explain this? Question 11 options: The company issued long-term debt The company issued new common stock The company made a large investment in fixed assets Depreciation expense increasedarrow_forwardSuppose you are conducting an analysis of the financial performance of Blue Hamster Manufacturing Inc. over the past three years. The company did not issue new shares during these three years and has faced some operational difficulties. The company has thus pilot tested some new forecasting strategies for better operations management. You have collected the company’s relevant financial data, made reasonable assumptions based on the information available, and calculated the following ratios. Ratios Calculated Year 1 Year 2 Year 3 Price-to-cash-flow 6.40 8.32 9.32 Inventory turnover 12.80 15.36 17.20 Debt-to-equity 0.20 0.21 0.25 Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply. A. The company’s creditworthiness has improved over these three years as evidenced by the increase in its debt-to-equity ratio over time. B. Blue…arrow_forwardDuring the year, D-Bat increased it accounts receivable by $150, decreased its STNP by $185 and decreased its accounts payable by $80, paid dividends of $50, increased its LTD by $100, decreased its inventory by $50 and issued $25 of common stock. What is the cash flow from financing activities?arrow_forward
- Summit Manufacturing’s most recent statements of cash flows indicate that the firm has paid large dividends to its stockholders in each of the past three years. Upon noting this information, A : potential investors would be more likely to invest in Summit, but potential lenders may be less likely to grant the company a loan. B : potential investors would be less likely to invest in Summit, but potential lenders may be more likely to grant the company a loan. C : potential investors would be less likely to invest in Summit, and potential lenders may be less likely to grant the company a loan. D : potential investors would be more likely to invest in Summit, and potential lenders may be more likely to grant the company a loan.arrow_forwardWhich of the following actions are most likely to directly increase cash as shown on a firms balance sheet? Explain and state the assumptions that underlie your answer. a. It issues $4 million of new common stock. b. It buys new plant and equipment at a cost of $3 million c. It reports a large loss for the year d. It increases the dividends paid on its common stockarrow_forwardRequired: (a) Prepare a cash flow statement for Chamber Corp for the year ended 31 December 2021. (b) Reply to the following questions put to you by one of the directors of the company: 'Can you please explain to me how we have a healthy profit yet our bank overdraft has reached a record level? Surely there must be something wrong with the profit calculations.'arrow_forward
- 1. Calculate the following values for the company for the year ending in 20x9. Present evidence of all your calculations.a. NOPAT - Net Operating Profit after Taxesb. OCF - Operating Cash Flowc. FCF - Free Cash Flow2. Discuss what meaning each of the measures calculated in the previous question has, both for management and for investors and creditors, among other constituents.3. What is the main cause of the differences that exist between the company's earnings and the cash flows of the same evaluated period?arrow_forwardyou have developed the following pro forma income statement for your? corporation: it represents the most recent? year’s operations, which ended yesterday. a.if sales should increase by 25 ?percent, by what percent would earnings before interest and taxes and net income? increase? b.if sales should decrease by 25 ?percent, by what percent would earnings before interest and taxes and net income? decrease? q c.if the firm were to reduce its reliance on debt financing such that interest expense were cut in? half, how would this affect your answers to parts a and b?? sales $ 45,750,000 variable costs -22,800,000 revenue before fixed costs $ 22,950,000 fixed costs -9,200,000 ebit $ 13,750,000 interest expense -1,350,000 earnings before taxes $ 12,400,000 taxes (50%) -6,200,000 net income $ 6,200,000arrow_forwardWhich of the following statements is CORRECT? The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock. The statement of cash flows shows how much the firm's cash and short-term liquid securities (or cash equivalents), increased or decreased during a given year. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets. The statement of cash flows shows where the firm's cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital.arrow_forward
- The management of Oriole Company is trying to decide whether it can increase its dividend. During the current year, it reported net income of $877,100. It had net cash provided by operating activities of $644,300, paid cash dividends of $83,100, and had capital expenditures of $275,800.Compute the company’s free cash flow. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Free cash flow $arrow_forwardILoveFinance, Inc., provided the following financial information for the quarter ending September 30, 2006: Net income $241,463 Depreciation and amortization $133,414 Increase in receivables $102,709 Increase in accounts payables $62,411 Decrease in marketable securities $31,225 Increase in inventory $81,336 What is the cash flow from operating activities generated during this quarter by the firm? a. $253,243 b. -$308,458 c. $343,243 d. $374,468arrow_forwardIndicate how each event affects the elements of the financial statements. Use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate no effect on net income. In the cash flow column, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate no effect on cash flows (i) Howard Co. declared and paid a $1.50 per share cash dividend on the 20,000 shares of its common stock.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License