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Financial Management Week 1 Homework

The document contains a homework assignment with 10 multiple choice questions related to financial accounting concepts. Question 1 asks about earnings per share calculations for Allen Lumber Company. Question 2 asks about operating profit for Ball Corp given certain financial information. The remaining questions ask about various accounting items and how they are classified on financial statements or how they impact cash flows.

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5K views

Financial Management Week 1 Homework

The document contains a homework assignment with 10 multiple choice questions related to financial accounting concepts. Question 1 asks about earnings per share calculations for Allen Lumber Company. Question 2 asks about operating profit for Ball Corp given certain financial information. The remaining questions ask about various accounting items and how they are classified on financial statements or how they impact cash flows.

Uploaded by

F4AR
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FINC 350 HOMEWORK #1

Question 1 (1.5 points)


Allen Lumber Company had earnings after taxes of $580,000 in the year 2006 with 400,000 shares outstanding on December 31, 2006. On January 1, 2007, the firm issued 35,000 new shares. Because of the proceeds from these new shares and other operating improvements, 2007 earnings after taxes were 25 percent higher than in 2006. Earnings per share for the year-end 2007 was Question 1 options:

1) $1.67 2) $1.45 3) $1.81 4) None of these


Question 1 0 / 1.5 points Allen Lumber Company had earnings after taxes of $580,000 in the year 2006 with 400,000 shares outstanding on December 31, 2006. On January 1, 2007, the firm issued 35,000 new shares. Because of the proceeds from these new shares and other operating improvements, 2007 earnings after taxes were 25 percent higher than in 2006. Earnings per share for the year-end 2007 was 1) $1.67 2) $1.45 3) $1.81 4) None of these

Question 2 (1.5 points)


Consider the following information for Ball Corp.

What is the Operating Profit for Ball Corp?

Question 2 options:

1) $71,450 2) $90,000 3) $120,000 4) None of these


Question 3 (1.5 points)
How many of the following items are found on the balance sheet, rather than the income statement? * * * * * * * * * * Accounts receivable Retained earnings Income tax expense Accrued expenses Cash Selling and administrative expenses Plant and equipment Operating expense Marketable securities Interest expense BALANCE SHEET BALANCE SHEET INCOME STATEMENT BALANCE SHEET BALANCE SHEET INCOME STATEMENT BALANCE SHEET INCOME STATEMENT BALANCE SHEET INCOME STATEMENT

Question 3 options:

1) 2) 3) 4)

3 of these items are found on the balance sheet 4 of these items are found on the balance sheet 5 of these items are found on the balance sheet 6 of these items are found on the balance sheet

Question 4 (1.5 points)

Given the following, what is free cash flow? Question 4 options:

1) $115,000 2) $235,000 3) $185,000 4) $165,000


Question 4

Given the following, what is free cash flow?

1) $115,000 2) $235,000 3) $185,000 4) $165,000

Compute the net increase or decrease in cash flows if Star Corporation had $150,000 in net income, $20,000 in depreciation expense, a decrease of 15,000 in A/R and an increase in bonds payable of 50,000 Question 5 options:

Question 5 (1.5 points)

1) $195,000 2) $205,000 3) $235,000 4) $270,000


Question 6 (1.5 points)
Density Farms, Inc. had sales of $500,000, cost of goods sold of $180,000, selling and administrative expense of $70,000, and operating profit of $90,000. What was the value of depreciation expense? Question 6 options:

1) $170,000 2) $230,000 3) Less than $170,000 4) None of these


Question 7 (1.5 points)
How many of the following balance sheet items are classified as current? Retained earnings STOCKHOLDERS EQUITY Accounts payable CURRENT LIABILITY Plant and equipment ASSET PLANT AND EQUIPMENT Inventory CURRENT ASSET Common stock (Part of) STOCKHOLDERS EQUITY Bonds payable LONG-TERM LIABILITY Accrued wages payable CURRENT LIABILITY Accounts receivable CURRENT ASSET Preferred stock STOCKHOLDERS EQUITY

Question 7 options:

1) 3 of these items are classified as current 2) 4 of these items are classified as current 3) 5 of these items are classified as current 4) 6 of these items are classified as current
Question 7 How many of the following balance sheet items are classified as current? Retained earnings Accounts payable Plant and equipment Inventory Common stock Bonds payable Accrued wages payable Accounts receivable Preferred stock 1) 3 of these items are classified as current 2) 4 of these items are classified as current 3) 5 of these items are classified as current 4) 6 of these items are classified as current

How many of the following items are found on the income statement, rather than the balance sheet? * Sales INCOME STATEMENT * Notes payable (6 months) BALANCE SHEET CURRENT LIABILITY * Bonds payable, maturity 2001 BALANCE SHEET LIABILITY (Depending when due * Common stock BALANCE SHEET STOCKHOLDERS EQUITY * Depreciation expense INCOME STATEMENT * Inventories BALANCE SHEET - ASSETS * Capital in excess of par value BALANCE SHEET STOCKHOLDERS EQUITY * Net income (earnings after taxes) INCOME STATEMENT * Income tax payable INCOME STATEMENT Question 8 options:

Question 8 (1.5 points)

1) 2) 3)

2 of these items are found on the income statement 3 of these items are found on the income statement 4 of these items are found on the income statement

4)

5 of these items are found on the income statement

Question 8 How many of the following items are found on the income statement, rather than the balance sheet? * Sales * Notes payable (6 months) * Bonds payable, maturity 2001 * Common stock * Depreciation expense * Inventories * Capital in excess of par value * Net income (earnings after taxes) * Income tax payable 1) 2) 3) 4) 2 of these items are found on the income statement 3 of these items are found on the income statement 4 of these items are found on the income statement 5 of these items are found on the income statement

Question 9 (1.5 points)


How many of the following items decrease cash flow in the Statement of Cash flows? * Increase in accounts receivable DECREASE * Increase in notes payable INCREASE * Depreciation expense INCREASE * Increase in investments DECREASE * Decrease in accounts payable DECREASE * Decrease in prepaid expenses INCREASE * Dividend payment DECREASE * Increase in accrued expenses INCREASE Question 9 options:

1) 2) 3) 4)

2 of these items decrease cash flow 3 of these items decrease cash flow 4 of these items decrease cash flow 5 of these items decrease cash flow
Question 10 (1.5 points)

Given the following, what is free cash flow?

Question 10 options:

1) $115,000. 2) $235,000. 3) $185,000. 4) $165,000

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