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Free cash flow (FCF) : ​


A) When positive indicates the operating cash flow of a firm provides enough cash for asset growth and may result in something for shareholders.
B) Is calculated by subtracting the increase in gross fixed assets and increase in current assets from the operating cash flow of a firm
C) Provides an estimate as the whether a company will provide cash or require cash in the future.
D) All of the above.

E) B) and D)
F) B) and C)

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Listed below are the account balances for UBUS, Inc. The income statement balances are for the year, 20X4. The balance sheet balances are shown as of 1/1/20X4 and 12/31/20X4. They are listed in alphabetical order, NOT in the order they appear on the statements themselves. The applicable tax rate is 40%. You are to use this information to answer the following SEVEN questions (6-a through 6-g). Income Statement for 20X4 Listed below are the account balances for UBUS, Inc. The income statement balances are for the year, 20X4. The balance sheet balances are shown as of 1/1/20X4 and 12/31/20X4. They are listed in alphabetical order, NOT in the order they appear on the statements themselves. The applicable tax rate is 40%. You are to use this information to answer the following SEVEN questions (6-a through 6-g). Income Statement for 20X4 a)What was the Quick Ratio for UBUS Inc. as of 12/31/20X4? a. Less than 1.0 b. From 1.0 - 1.5 c. From 1.51 - 1.9 d. From 1.91 - 2.3 e. More than 2.3 b)What kind of impact will the change in the Accounts Receivable balance have on Operating Cash Flows portion of the Statement of Cash Flows in 20X4? a.Decrease operating cash flows by $10 b.Decrease operating cash flows by $5 c.Increase operating cash flows by $10 d Increase operating cash flows by $5 e. No impact c)Where will the change in Fixed Assets (gross)appear on the Statement of Cash Flows? a. The Operating Section b. The Investing Section c. The Financing Section d. It won't appear on the Statement of Cash Flows e. Can't tell from the information given d)What is UBUS Inc.'s Times Interest Earned (TIE)ratio for 20X4? a. Less than 2.0 b. From 2.0 - 3.0 c. From 3.1 - 4.0 d. From 4.1 - 5.0 e. More than 5.0 e)What is UBUS Inc.'s Return on Assets (ROA)for 20X4? a. Less than 12.0% b. From 12.0% - 12.5% c. From 12.6% - 13.0% d. From 13.1% - 13.5% e. More than 13.5% f)What is UBUS Inc.'s Return on Sales (profit margin)for 20X4? a. Less than 9.0% b. From 9.0% - 11.0% c. From 11.1% - 13.0% d. from 13.1% - 15.0% e. More than 15% g)What is UBUS Inc.'s Debt Ratio as of 12/31/20X4? a. Less than 43.0% b. From 43.0% - 46.0% c. From 46.1% - 49.0% d. From 49.1 - 52.0% e. More than 52.0% Listed below are the account balances for UBUS, Inc. The income statement balances are for the year, 20X4. The balance sheet balances are shown as of 1/1/20X4 and 12/31/20X4. They are listed in alphabetical order, NOT in the order they appear on the statements themselves. The applicable tax rate is 40%. You are to use this information to answer the following SEVEN questions (6-a through 6-g). Income Statement for 20X4 a)What was the Quick Ratio for UBUS Inc. as of 12/31/20X4? a. Less than 1.0 b. From 1.0 - 1.5 c. From 1.51 - 1.9 d. From 1.91 - 2.3 e. More than 2.3 b)What kind of impact will the change in the Accounts Receivable balance have on Operating Cash Flows portion of the Statement of Cash Flows in 20X4? a.Decrease operating cash flows by $10 b.Decrease operating cash flows by $5 c.Increase operating cash flows by $10 d Increase operating cash flows by $5 e. No impact c)Where will the change in Fixed Assets (gross)appear on the Statement of Cash Flows? a. The Operating Section b. The Investing Section c. The Financing Section d. It won't appear on the Statement of Cash Flows e. Can't tell from the information given d)What is UBUS Inc.'s Times Interest Earned (TIE)ratio for 20X4? a. Less than 2.0 b. From 2.0 - 3.0 c. From 3.1 - 4.0 d. From 4.1 - 5.0 e. More than 5.0 e)What is UBUS Inc.'s Return on Assets (ROA)for 20X4? a. Less than 12.0% b. From 12.0% - 12.5% c. From 12.6% - 13.0% d. From 13.1% - 13.5% e. More than 13.5% f)What is UBUS Inc.'s Return on Sales (profit margin)for 20X4? a. Less than 9.0% b. From 9.0% - 11.0% c. From 11.1% - 13.0% d. from 13.1% - 15.0% e. More than 15% g)What is UBUS Inc.'s Debt Ratio as of 12/31/20X4? a. Less than 43.0% b. From 43.0% - 46.0% c. From 46.1% - 49.0% d. From 49.1 - 52.0% e. More than 52.0% a)What was the Quick Ratio for UBUS Inc. as of 12/31/20X4? a. Less than 1.0 b. From 1.0 - 1.5 c. From 1.51 - 1.9 d. From 1.91 - 2.3 e. More than 2.3 b)What kind of impact will the change in the Accounts Receivable balance have on Operating Cash Flows portion of the Statement of Cash Flows in 20X4? a.Decrease operating cash flows by $10 b.Decrease operating cash flows by $5 c.Increase operating cash flows by $10 d Increase operating cash flows by $5 e. No impact c)Where will the change in Fixed Assets (gross)appear on the Statement of Cash Flows? a. The Operating Section b. The Investing Section c. The Financing Section d. It won't appear on the Statement of Cash Flows e. Can't tell from the information given d)What is UBUS Inc.'s Times Interest Earned (TIE)ratio for 20X4? a. Less than 2.0 b. From 2.0 - 3.0 c. From 3.1 - 4.0 d. From 4.1 - 5.0 e. More than 5.0 e)What is UBUS Inc.'s Return on Assets (ROA)for 20X4? a. Less than 12.0% b. From 12.0% - 12.5% c. From 12.6% - 13.0% d. From 13.1% - 13.5% e. More than 13.5% f)What is UBUS Inc.'s Return on Sales (profit margin)for 20X4? a. Less than 9.0% b. From 9.0% - 11.0% c. From 11.1% - 13.0% d. from 13.1% - 15.0% e. More than 15% g)What is UBUS Inc.'s Debt Ratio as of 12/31/20X4? a. Less than 43.0% b. From 43.0% - 46.0% c. From 46.1% - 49.0% d. From 49.1 - 52.0% e. More than 52.0%

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a) c (45 + 75)/(30 + 35) = 1.8...

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Other things held constant, which of the following will DECREASE the current ratio, assuming an initial current ratio greater than 1.0?


A) Machinery is purchased using cash
B) Inventory is sold at cost for cash
C) Accounts payables are paid with cash
D) Both a & c
E) None of the above

F) C) and D)
G) A) and C)

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Firms sometimes disguise the cost or layoffs and reorganizations that may be attributable to poor management as:


A) continuing operations.
B) unusual activities.
C) restructuring charges.
D) None of the above

E) A) and D)
F) A) and C)

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C

Explain the different types of activities presented in the statement of cash flows.

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A business's statement of cash flows is ...

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​Which of the following would be classified as a use of cash?


A) An increase in depreciation.
B) A decrease in accounts receivable.
C) A decrease in accruals.
D) Both b & c
E) All of the above

F) B) and C)
G) A) and E)

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Ratios are typically compared with similar figures from history, the competition, and budget.

A) True
B) False

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Financial analysts look for problems, things that may not be what they appear, or results that signal the firm could be in trouble.

A) True
B) False

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A decrease in accounts receivables is categorized as a use of funds.

A) True
B) False

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Which of the following activities will not impact the operating section of the Statement of Cash Flows?


A) Receipt of cash from a customer paying a bill
B) Payment of cash to a vendor
C) Payment of interest expense on outstanding bonds
D) Payment of dividends to stockholders
E) Neither c. or d. will impact the operating section.

F) A) and E)
G) A) and B)

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D

The Ragin Cajun had an operating income (EBIT) of $260,000 last year. The firm had $18,000 in depreciation expenses, $15,000 in interest expenses, and $60,000 in selling, general, and administrative expenses. If the Cajun has a marginal tax rate of 40 percent, what was its cash flow from operating activities last year?


A) $165,000
B) $230,000
C) $132,000
D) $162,000

E) C) and D)
F) A) and B)

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How does the Du Pont equation help us isolate problems in business performance?

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The Du Pont equations each state a broad...

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Triangle Systems had earnings after tax (EAT) of $1,000,000 last year. Included in its expenses were $50,000 of interest, $100,000 of deferred taxes (taxes that show up on the current year's income statement as expenses but aren't paid in cash in the current year) , and $150,000 of depreciation. In addition, the company paid dividends of $200,000 to its stockholders last year. What was Triangle's net cash flow last year?


A) $1,500,000
B) $1,300,000
C) $1,150,000
D) $1,050,000

E) A) and B)
F) None of the above

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Use the following information for Chambers Corporation to answer the following question: Use the following information for Chambers Corporation to answer the following question: ​ ​ Calculate the net cash from financing activities for Chambers Corporation for the year 20x2. A) ​$1,610,000 B) ​Negative $610,000 C) ​$610,000 D) ​$390,000 ​ ​ Calculate the net cash from financing activities for Chambers Corporation for the year 20x2.


A) ​$1,610,000
B) ​Negative $610,000
C) ​$610,000
D) ​$390,000

E) B) and C)
F) B) and D)

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The Statement of Cash Flows: ​


A) Summarizes the assets and liabilities of a firm
B) Summarizes the income and expenses of a firm
C) ​Summarizes the sources and uses of cash of a firm
D) Summarizes the assets and expenses of a firm

E) C) and D)
F) B) and C)

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Ratio analysis involves taking a set of numbers out of the financial statements and forming ratios with them.

A) True
B) False

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A common size income statement presents each line item as a percent of assets.

A) True
B) False

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Which of the following ratios would probably not be used to assess the profitability of a firm?


A) Return on stockholders' equity
B) Return on total assets
C) Times interest earned
D) a and c only

E) A) and D)
F) A) and C)

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Why does the stock market generally price stocks above the net value of the firm's assets? Your explanation should include the market's perception of the firm as a going concern.

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The value of a business depends on the future cash flows it can generate. Those cash flows are created by the interaction of people (who possess knowledge and skill) with assets. In a successful business this combined action of people and equipment creates income that is worth far more than the cost of the equipment alone. This concept of value coming from the operation of the business's people and its equipment is known as the "going concern value" of the business.

The statement of cash flow is divided into the following sections:


A) operating activities and investing activities.
B) operating activities, financing activities, and equity activities.
C) operating activities; investing activities, and equity activities.
D) operating activities, financing activities; and investing activities.

E) All of the above
F) A) and C)

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