PRINCIPLES OF FINANCE UNIT1-MILESTONE 1

PRINCIPLES OF FINANCE UNIT1-MILESTONE 1. What expenses typically come first in the "Expenses" section of an income statement?  Non-operating expenses  Selling, general and administrative expenses  Tax expenses  Irregular expenses CONCEPT Standardizing Financial Statements 2 Under GAAP, how would dividends paid to company stockholders be accounted for on the statement of cash flows?  As an increase in cash flow from operations  As a decrease in cash flow from investment  As an increase in cash flow from financing  As a decrease in cash flow from financing CONCEPT The Statement of Cash Flows 3 Which of the following would explain a company’s day sales outstanding ratio rising from 32 to 41.25?  Internal The company's accounts receivable has decreased while the average inventory has increased.  The company's accounts receivable has decreased while total sales has increased.  The company's accounts receivable has decreased while the average inventory has remained constant.  The company's accounts receivable has remained constant while total sales has decreased. CONCEPT Asset Management Ratios 4 Georgia is interested in selling her company. Before seeking a buyer, she wants her income statements to show a trend of increasing gross profits. How can she achieve her goal?  Reduce cost of goods sold  Reduce net sales  Reduce operating expense  Reduce taxes paid CONCEPT The Income Statement 5 Financial forecasting answers the question "__________"  Do we have enough production capacity?  When should we begin? Internal  What are our goals?  What will our sales be? CONCEPT Financial Forecasting 6 If a balance sheet shows owner's equity of $10 million, current liabilities of $6 million and long-term liabilities of $15 million, then what are the total assets of the company?  $16 million  $25 million  $31 million  $19 million CONCEPT The Balance Sheet 7 In which scenario would benchmarking be least useful?