c214 Financial Management WGU

Trading on the NYSE is executed without a specialist T or F - correct answer False What are 2 types of financial instruments - correct answer Stocks and BondsM When revenue is matched with cost of sales in an income statement it is called? - correct answer matching principle A high quality customer just purchased $500,000 worth of product from your company. The contract calls for immediate delivery of this product with a cash payment of $300,000 today and $200,000 in the next 60 days. The expense associated with the product if $300,000, of which $100, has not been paid to your supplier. Under the accrual based accounting system you will most likely report Revenues of ___________________________Expenses of _______________________________ - correct answer Revenue $500,000, Expenses of 300,000 A firm reported retained earnings of $300 12/31/2021. For 12/31/2021, the firm reports retained earnings of $400 and pays dividends of $25. What was the net income in 2023? - correct answer Beg RE 300, NI = 125, Div -25, RE 400. A basic equation of the balance sheet is - correct answer Assets = equity - liabilities Sales minus cost of sales minus other expenses equals what? - correct answer Operating income or EBIT What is the balance sheet known as a permanent statement? - correct answer Because the other statements are reset at the end of the year. How do you calculated the change in retained earning? - correct answer Net income - dividends name four accounts that are a part of total assets - correct answer cash accounts receivable, inventory, long term assets. Sales misnus cost of sales minuss other expenses equals what? - correct answer Operating Income or EBIT Name 3 accounts that are part of current assets? - correct answer Inventory, Cash, accounts receivables, short term investments name 4 accounts that re part of total liabilities - correct answer Bonds, accounts payable, mortgage Intel reported the following for 2014: Net Income 100,000 Depreciation 20,000 Change in A/R 10,000 What is the cash flow from operating activities? - correct answer 100 + 20 - 10 = 110 name 3 accounts that are only included in Cash Flow from Financing CFF - correct answer Common stock, dividends paid, bonds payable Define the statement of cash flows - correct answer calculated for the same period of time as the Income Statement is calculated based on the Income Statement and the changes in the balance sheet is one of the 3 basic accounting statements Intel reported the following for 2014: Gross Equipment (1/1/14) 50,000 Gross Equipment (12/31/14) 65,000 Net income 100,000 Depreciation 20,000 What is the cash flow from investing activities for 2014? - correct answer 15000, depreciation is not counted when using Gross PPE What is the cash flow from operations given the following information? Net Income: 450,000 Change in accounts receivable: 120,000 Change in inventory: -90,000 Change in PP&E: 60,000 depreciation expense 110,000 Change in accounts payable: 50,000 Change is accrued expenses: -75,000 Change in common stock: 300,000 - correct answer 450 + 110 Depn - 120 + 90 + 50 - 75 = 505,000 What is the cash flow from investing? increase in gross PP&E: 125,000 Beginning net PP&E: 750,000 Ending net PP&E: 850,000 Depreciation expense: 25,000 - correct answer Net end 850 less Net Beg 750 plus Depn 25 = 125 Outflow, 125,000 What is the cash flow from investing? Beginning Net PP&E:250,000 Ending Net PP&E: 300,000 Depreciation expense: 40,000 Change in long term investments: 100,000 change in short term investments: 50,000 - correct answer Net end 300 - net Beg 250 + Depn 40 + LT invest + 100 = 190 outflow, 190,000 What is the cash flow from financing? accounts payable 100,000 accrued expenses 50,000 increase in mortgage payable 300,000 decrease in bonds payable 75,000 dividends paid 80,000 - correct answer in mortg 300 - dec bonds 75 - dividends paid 80 = 145,000 When Fixed Assets increase what happens to Cash? - correct answer Cash decreases Last year a firm recorded Net PP&E of $4,600 while this year the same firm recorded Net PP&E of $4,500. If the depreciation expense for last year and this year are $500 and $800 respectively, what is the CFI of the company? (assume no asset disposals) - correct answer ppe end 4500 - ppe beg 4600 + curr yr depr 800 = 700 increase/outflow Which is the purpose of the statement of cash flows - correct answer explains the change in cash over the course of the specified timeframe Financial data for intel is given below for 2014 EBIT: 1,000,000 Depreciation: 30,000 Change in working capital: (10,000) net capital expenditures: 15,000 tax rate 40% Compute the free cash flow for 2014 - correct answer FCFF=EBIT(1+t) + depreciation - Inc NWC - Cap ex 1000*(1-.4) + 30 + 10 - 15 = 625,000 Suppose the inventory turnover of a company is higher than the industry. Based on this observation, which of the following is most likely? - correct answer The firm has too little inventory resulting in lost sales or stock -outs. Intel provides the following data for 2014: A/R 600 Inventory 800 Fixed Assets 1,000 A/P 500 Long term debt 900 Common Stock 400 What is the current ratio? - correct answer 600 + 80/500 = 2.8 If a company wishes to obtain a bank loan, will it want to have a higher current ratio or a lower current ratio? - correct answer higher A company has cash of 100, accounts receivable of 250, inventory of 300, and accounts payable of 300. what is the quick ratio? - correct answer (100 + 250) / 300 = 1.17 A company has cash sales of 200 and credits sales of 750. It's average accounts receivable of 90. What is the ar turnover? - correct answer 750/90 = 8.33