Liberty BUSI 320 Chapter 2 Reading Assignment Answers Complete Solutions
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Using the following information, determine the cash flow from operating activities. Net income is $75,000 and depreciation expense for the year is $50,000.
The cash flow from operating activities is .
A company sells 500 shirts at a price of $15 each with a cost of goods sold of $2 per shirt. The company has selling and administrative expenses of $2,500, depreciation expenses of $500, interest expenses of $1,000, and a tax rate of 35%. Calculate the operating profit (EBIT)?
The P/E ratio can be used by the investor to
Which of the following factors influence the price-earnings (P/E) ratio?
The company has a price-earnings ratio of 15 times and earnings per share were $3. What is the market value of each share of stock?
A firm has earnings after taxes of $200,000, depreciation expense of $50,000, accounts receivable increased by $25,000, inventory increased by $10,000, accounts payable increased by $15,000, and accrued expenses decreased by $5,000. The firm’s cash flow from operating activities is _____.
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If the firm has depreciation expense of $75,000 and a net loss of $50,000, what is the amount of cash flow for the period? a. $25,000 b. $0 c. $100,000 d, $125,000
As of January 1, 2014, the company has $500,000 in retained earnings. During the year the company had a net loss of $50,000 and paid cash dividends of $100,000. What is the amount of retained earnings as of December 31, 2014? a. $350,000 b. $450,000 c. $200,000 d. $400,000
The ability to match revenues and expenses in the period in which they occur in order to appropriately measure profit is a primary _____ of the accrual method of accounting. a. advantage b. disadvantage
Plant an equipment includes: (select all that apply) a. buildings b. land c. equipment d. investments
Includes an allowance for bad debts to determine their collection value
A limitation of the income statement is the flexibility in the reporting of transactions. For example, a company can choose to value inventory using FIFO, LIFO, of the weighted average. Therefore, similar events may result in: a. differing measurements of income b. insider trading c. differing turnover ratios d. differing measurements of leverage
Each of the following is tax deductible to a corporation, except: a. dividends b. salary expense c. cost of goods sold d. interest paid
Firms expected to provide returns greater than those for the market, with equal or less risk, often have P/E ratios that are _____ the market P/E ratio, a. higher than b. equal to c. lower than
_____ is/are defined by economists as the change in real worth that occurs between the beginning and the end of a specified period of time. a. income b. depreciation c. interest d. dividends
When a firm’s earnings are dropping rapidly, its stock price, though declining too, may not match the magnitude of the falloff in earnings. This process can give the appearance of an _____ P/E ratio under adversity. a. increasing b. decreasing
Investments represent a(n): a. long-term commitment of funds b. temporary expenditure c. short-term commitment of funds d. a fully depreciated asset
