Which of the following is true pertaining to a balance sheet?

More liquid assets are listed first

As a result of the Tax Reform Act of 2017, which of the following is correct?

C Corporations pay a corporate tax at a flat 21%

Which of the following is true for how a corporation pays interest and dividends?

Firms have an incentive to finance themselves with debt

Total net operating capital is _________?

NOWC + operating long term assets

Which of following is true for how a corporation invests in another corporation?

Interest income received is taxed as ordinary income

Which is following is true pertaining to an income statement?

EPS is also called the "bottom line"

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FIN 441 - Chap 2 (Financial Statements, cash flows, and taxes)

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Questions 20

Answers

1
Which of the following is true pertaining to a balance sheet?
Equity has to be repaid at maturity
More liquid assets are listed first
None of the answers is correct
Debt holders are residual claimants
2
Notes payable are a current liability?
True
False
3
Municipal bond investments are better for investors in lower individual tax brackets
True
False
4
Market value added reflects that _________ is greater than equity supplied by shareholders.
Book value of equity
Value of debt
NOPAT
Market value of equity
5
When is growth profitable?
If ROIC > operating capital
If FCF > ROIC
If ROIC > WACC
If ROIC < WACC
6
As a result of the Tax Reform Act of 2017, which of the following is correct?
Individual income tax structure became regressive
C Corporations pay a corporate tax at a flat 21%
None of the answers is correct
Corporate income tax structure became progressive
7
Stock prices reflect __________
an exact summary of all economic value added (EVA)
future performance
None of the answers is correct
past performance
8
Net cash flow equals _________?
None of the answers is correct
after tax net income
net income plus depreciation
net income minus depreciation
9
Which of the following is true for how a corporation pays interest and dividends?
Interest payments are not deductible
Dividend payments are subject to 50% exclusion from taxes
None of the answers is correct
Firms have an incentive to finance themselves with debt
10
Total net operating capital is _________?
A change in operating capital from one year to next
NOPAT
None of the answers is correct
NOWC + operating long term assets
11
Economic value added measures managerial effectiveness over __________
Two of the answers are correct
in a given year
different divisions of firm
the history of the company
12
Increases in stock repurchases is a cash outflow or use of cash?
False
True
13
Which of following is true for how a corporation invests in another corporation?
Interest income is deductible
Interest income is subject to 50% exclusion from taxes
None of the answer is correct
Interest income received is taxed as ordinary income
14
Sales of operating current assets is a cash inflow or source?
True
False
15
On statement of stockholder's equity which is following is correct?
Cash dividends paid in the year reduce retained earnings
Two of the answers are correct
Net income earned increases retained earnings
None of the answers is correct
16
Negative FCF is always bad?
False
True
17
Increase in accounts payable is a cash inflow or source?
True
False
18
If accounts receivable increased from last year to this year, all other variables constant, which is correct?
NOWC would decrease
FCF would increase
None of the answers is correct
FCF would decrease
19
Which is following is true pertaining to an income statement?
Net inc + dividends paid equals addition to retained earning
EPS is also called the "bottom line"
None of the answers is correct
Income statement represents a snapshot in time
20
Economic value measures ________ profit
social
economic
accounting
net income

FIN 441 - Chap 2 (Financial Statements, cash flows, and taxes) Flashcards | StudBud