quiz cf1

Which one of these equations is an accurate expression of the balance sheet?

• Assets = Liabilities - Stockholders' equity

• Stockholders' equity = Assets + Liabilities

• Liabilities = Stockholders' equity −Assets

• Assets = Stockholders' equity −Liabilities

• Stockholders' equity = Assets -Liabilities

Which one of these accounts is classified as a current asset on the balance sheet?

• intangible asset

• accounts payable

• preferred stock

• inventory

• net plant and equipment

Net working capital is defined as:

• current assets plus fixed assets

• current assets plus stockholders' equity

• fixed assets minus long-term liabilities

• total assets minus total liabilities

• current assets minus current liabilities

The cash flow resulting from a firm's ongoing, normal business activities is referred to as the:

• operating cash flow

• net capital spending

• additions to net working capital

• cash flow to retained earnings

• cash flow to investors

Operating cash flow is defined as:

• Pretax income - Taxes

• Net income - Dividends

• EBIT + Depreciation - Taxes

• Pretax income + Depreciation

• Cash flow to investors + Taxes

Which one of these terms refers to the firm's interest payments less any net new borrowing?

• operating cash flow

• capital spending

• net working capital

• cash flow to stockholders

• cash flow to creditors

A firm's dividend payments less any net new equity raised is referred to as the firm's:

• operating cash flow

• capital spending

• net working capital

• cash flow from creditors

• cash flow to stockholders

Which one of the following assets is generally the most liquid?

• inventory

• buildings

• accounts receivable

• equipment

• patents

Which one of the following statements concerning liquidity is correct?

• If you sold an asset today, it was a liquid asset

• If you can sell an asset next year at a price equal to its actual value, the asset is highly liquid

• Trademarks and patents are highly liquid

• The less liquidity a firm has, the lower the probability the firm will encounter financial difficulties

• Balance sheet accounts are listed in order of decreasing liquidity

Net capital spending is equal to the:

• net change in total assets plus depreciation

• net change in fixed assets plus depreciation

• net income plus depreciation

• difference between the market and book values of the total assets

• change in total assets