Corporate Finance Chap 03

Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marketable securities worth $335,485, accounts payables worth $1,159,357, inventory of $1,651,599, accounts receivables of $1,488,121, short-term notes payable worth $313,663, and other current assets of $121,427. What is the company's net working capital?

• 3596632
• 1801784
• 2123612
• 1673421

Centennial Brewery produced revenues of $1,145,227 in 2008. It has expenses (excluding depreciation) of $812,640, depreciation of $131,335, and interest expense of $81,112. It pays an average tax rate of 34 percent. What is the firm's net income after taxes?

• 120140
• 248475
• 79292
• 40848

The generally accepted accounting principles (GAAP) are

• rules that outline how a firm can operate ethically.
• rules on how the firm will be valued in the event of a merger.
• rules and procedures that define how companies are to maintain financial records and prepare financial reports
• rules for how a company can issue stock to raise money

Dell Computer Corporation has receivables of $2.5 million and inventory worth $1.8 million. The firm plans to borrow $2 million for working capital purposes from Austin First National Bank. In evaluating the loan request, the bank should place the most emphasis on

• the matching principle
• the realization principle
• the going-concern assumption
• the assumption of arm's-length transactions

On June 23, 2008, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The goods were shipped to Rynex on July 2. The firm's accountants should recognize the sale on

• 2008-06-23 00:00:00
• 2008-07-02 00:00:00
• 2008-09-20 00:00:00
• none of the above

Trekkers Footwear bought a piece of machinery on January 1, 2006 at a cost of $2.3 million, and the machinery is being depreciated annually at an amount of $230,000 for 10 years. Its market value on December 31, 2008 is $1.75 million. The firm's accountant is preparing its financial statement for the fiscal year end on December 31, 2008. The asset's value should be recognized on the balance sheet at

• $2.3 million
• $1.61 million
• 230000
• $1.75 million

The conventional way of preparing a balance sheet is to list all assets in the order of their

• market value
• risk
• liquidity
• historical cost

When prices are falling, valuing inventory using the LIFO method rather than FIFO gives

• inventory a higher value but lowers net income
• inventory a lower value and also lowers net income
• both inventory and net income a higher value
• inventory a lower value and net income a higher value

Maddux, Inc., has completed its fiscal year and reported the following information. The company had current assets of $153,413, net fixed assets of $ 412,331, and other assets of $7,822. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. How much retained earnings does the firm have?

• 405648
• 243648
• 167918
• 573566

Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountants. The company had current assets of $145,332, net fixed assets of $356,190, and other assets of $4,176. The firm has long-term debt of $76,445, common stock of $200,000, and retained earnings of $134,461. What amount of current liabilities does this firm have?

• 94792
• 505678
• 171217
• none of the above