QUIZ chapter 2 corporate finance

The right-hand side of the balance sheet is where ________ is reported.

• cash and equivalents  

• accumulated retained earnings

• intangible assets

• property, plant, and equipment

A(n) ________ asset is one that can be readily converted into cash without a significant loss in its value.

• intangible

• fixed

• marketable

• liquid

In the accounting statement of cash flows, ________ is calculated by adding back noncash expenses to net income, and then adjusting for changes in current assets and current liabilities

• cash flow to investors

• cash flow from investing activities

• cash flow from operations

• cash flow from financing activities

The accounting definition that underlies the balance sheet can be expressed accurately as:

• Stockholders’ equity ≡ Assets − Liabilities

• Assets ≡ Stockholders’ equity − Liabilities

• ssets ≡ Liabilities − Stockholders’ equity

• Liabilities ≡ Stockholders’ equity − Assets

An increase of net working capital means an cash (a)   of the firm

Operating cash flow is defined as:

• Pretax income + Depreciation.

• Net income − Dividends.

• Pretax income − Taxes.

• EBIT + Depreciation − Taxes.

A firm’s accounting performance during a particular period of time is reported on the:

• statement of cash flows.

• statement of equity.

• balance sheet.

• income statement.

In the accounting statement of cash flows, interest expense is:

• ignored completely.

• included as a financing activity.

• included as an investing activity.

• included in operations.

Capital spending is equal to:

• beginning total assets plus asset purchases minus asset sales.

• ending total assets minus beginning total assets.

• ending net fixed assets minus beginning net fixed assets.

• ending net fixed assets minus beginning net fixed assets plus depreciation.

For a growing firm, the change in net working capital is generally:

• equal to zero.

• highly erratic.

• positive.

• negative.