Question 1 2.5 / 2.5 points
Which group of people would be the most concerned about the ability of a firm to make interest and principal payments?
Auditors
Customers
Creditors
Investors
Question 2 2.5 / 2.5 points
__________ ratios measure the extent of a firm's financing with debt relative to equity and its ability to cover interest and other fixed charges.
Question 3 2.5 / 2.5 points
A __________ statement contains useful information about the board of directors and executive compensation, option grants, audit-related matters, related party transactions and proposals to be voted on by shareholders.
Question 4 2.5 / 2.5 points
Which ratios help assess the firm's ability to meet cash needs as they arise?
Question 5 2.5 / 2.5 points
What is in-process research and development?
Question 6 2.5 / 2.5 points
How can the depreciation expense amount impact the quality of earnings?
Question 7 2.5 / 2.5 points
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's debt ratio is:
Question 8 2.5 / 2.5 points
__________ ratios measure a firm's ability to meet cash needs as they arise.
Question 9 2.5 / 2.5 points
FASB Statement No. 154 changed the requirements for disclosures of accounting changes. Why could this be a concern to the analyst?
Question 10 2.5 / 2.5 points
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's days payable outstanding is:
Question 11 2.5 / 2.5 points
Supplementary schedules, such as data related to the breakdown of key financial figures by operating segment,:
Question 12 2.5 / 2.5 points
The __________ of a financial statement analysis will vary depending on the perspective of the financial statement user.
costs
objectives
outcomes
taxes
Question 13 2.5 / 2.5 points
What is vendor financing?
Question 14 2.5 / 2.5 points
The Du Pont System shows which of the following series of relationships?
Question 15 2.5 / 2.5 points
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's quick ratio is:
0.85
2.00
1.00
0.75
Question 16 0 / 2.5 points
Three ratios that help the financial analyst assess short-term solvency are the:
Question 17 2.5 / 2.5 points
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's times interest earned ratio is:
1.50
4.50
6.63
8.60
Question 18 2.5 / 2.5 points
__________ ratios measure the liquidity of specific assets and the efficiency of managing assets.
Activity
Quick
Computational
Turnover
Question 19 2.5 / 2.5 points
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's cash flow margin is:
5.23%
5.85%
6.24%
6.67%
Question 20 2.5 / 2.5 points
What is a "Big Bath"?
Lesson 6 Exam
Question 21 2.5 / 2.5 points
Which of the following could be indicative of cash flow problems or a result of an expansion?
Question 22 2.5 / 2.5 points
Jesse Corporation reported the following information for the current year:
(1) Net income is $205 million.
(2) Acquisitions were $32 million.
(3) Customer accounts receivable increased by $12 million.
(4) Dividends paid to common shareholders were $8 million.
(5) Depreciation expense was $41 million.
(6) Income tax payable decreased by $11 million.
(7) Long-term debt increased by $28 million.
(8) Accounts payable decreased by $6 million.
(9) Inventories increased by $17 million.
Required: Based on the above information, calculate the cash flow from operating activities.
$720 million
$600 million
$405 million
$200 million
Question 23 2.5 / 2.5 points
Identify the following as operating (O), financing (F), or investing (I) activities:
Current portion of long-term debt; Accounts receivable
Operating; Financing
Financing; Operating
Operating; Investing
Financing; Investing
Question 24 2.5 / 2.5 points
Which of the following items are included in the adjustments to net income to obtain cash flow from operating activities?
Question 25 2.5 / 2.5 points
The following question is based on the indirect method of presenting cash flow from operating activities. Indicate whether the following items will be added or subtracted from net income to obtain cash flow from operating activities.
How will a gain from an asset sale and a decrease in an accrued liability affect net income?
Question 26 2.5 / 2.5 points
Jesse Corporation reported the following information for the current year:
(1) Net income is $205 million.
(2) Acquisitions were $32 million.
(3) Customer accounts receivable increased by $12 million.
(4) Dividends paid to common shareholders were $8 million.
(5) Depreciation expense was $41 million.
(6) Income tax payable decreased by $11 million.
(7) Long-term debt increased by $28 million.
(8) Accounts payable decreased by $6 million.
(9) Inventories increased by $17 million.
Required: Based on the above information, calculate the cash flow from investing activities.
($16) million
($24) million
($32) million
($40) million
Question 27 2.5 / 2.5 points
Depreciation and amortization should be __________ to convert net income
to cash flow from operating activities. A gain on sale of asset should
be __________ to convert net income to cash flow from operating
activities.
Question 28 2.5 / 2.5 points
Indicate whether each of the following items would result in net cash flow from operating activities being higher (H) or lower (L) than net income.
Increase in inventory; Increase in accounts payable; Amortization expense
Question 29 2.5 / 2.5 points
Indicate whether each of the following items would result in net cash flow from operating activities being higher (H) or lower (L) than net income.
Decrease in deferred tax assets; Increase in deferred revenue; Decrease in income taxes payable
Question 30 2.5 / 2.5 points
Jesse Corporation reported the following information for the current year:
(1) Net income is $205 million.
(2) Acquisitions were $32 million.
(3) Customer accounts receivable increased by $12 million.
(4) Dividends paid to common shareholders were $8 million.
(5) Depreciation expense was $41 million.
(6) Income tax payable decreased by $11 million.
(7) Long-term debt increased by $28 million.
(8) Accounts payable decreased by $6 million.
(9) Inventories increased by $17 million.
Required: Based on the above information, calculate the cash flow from financing activities.
$8 million
$12 million
$20 million
$40 million
Question 31 2.5 / 2.5 points
An increase in inventory should be __________ to convert net income to cash flow from operating activities. An increase in accounts payable should be __________ to convert net income to cash flow from operating activities.
Question 32 2.5 / 2.5 points
Identify the following as operating (O), financing (F), or investing (I) activities:
Repurchase of a firm's own shares; Cash collections from loans to others
Question 33 2.5 / 2.5 points
Which of the following items would be classified as financing activities on the statement of cash flows?
Question 34 2.5 / 2.5 points
Which of the following items would be classified as operating activities on the statement of cash flows?
Question 35 2.5 / 2.5 points
What is implied if the accounts receivable account has increased?
Question 36 2.5 / 2.5 points
Identify the following as operating (O), financing (F), or investing (I) activities:
Proceeds from borrowing; Purchases of property, plant and equipment
Question 37 2.5 / 2.5 points
A decrease in accrued liabilities should be __________ to convert net income to cash flow from operating activities. A decrease in accounts receivable should be __________ to convert net income to cash flow from operating activities.
Question 38 2.5 / 2.5 points
Identify the following as operating (O), financing (F), or investing (I) activities:
Payments for purchase of inventory; Payments for taxes
Question 39 2.5 / 2.5 points
Use the indirect method to answer the question below. The following information is available for Casey Company:
Net income $200 Increase in plant and equip. $90
Depreciation expense 50 Payment of dividends 25
Increase in accts. receiv. 30 Increase in long-term debt 100
Decrease in inventories 10 Decrease in accounts payable 20
What is the change in cash for Casey Company?
$85
$375
$125
$195
Question 40 2.5 / 2.5 points
Analyzing cash inflows is important to determine in a firm. What is the preferred method of generating cash?
