9.A corporation isA. An entity owned by shareholders.В.an entity with limited liability privilege.C. a separate legal entity.D. All of the above.10. By looking at the statement of cash flows, which of the following issues will be analyzedby the management of a firm?A. Whether the firm is able to pay cash dividend.B. How the firm financed an investment in additional fixed assets.C. How much of the short-term debt is being used to finance fixed assets.D. All of the above.

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Answered: 9. A corporation is A. An entity owned…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 4QE

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Owners equity represents which of the following? A. the amount of funding the company has from issuing bonds B. the sum of the retained earnings and accounts receivable account balances C. the total of retained earnings plus paid-in capital D. the business owners/owners share of the company, also known as net worth or net assets
Which of the following items could appear in a company's cash flow statement? 1. Proposed dividends. 2. Rights issue of shares. 3. Bonus issue of shares 4. Repayment of loan.
30. The statement of financial position contributes to financial reporting by providing a basis for all of the following except * b. evaluating the capital structure of the enterprise. a. computing rates of return. c. determining the increase in cash due to operations. d. assessing the liquidity and financial flexibility of the enterprise 31.In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for * b. borrowing activities. d. financing activities. Option 1 c. lending activities. a. operating activities. 32. In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from * d. financing activities. a. lending activities. b. operating activities. c. investing activities. 33.On the statement of cash flows, which of the following items will…
27. Which of the following categories of a firm’s total cash flows accounts for cash flows resulting from the purchase or repayment of long-term loans, the issue of new stock, or the payment of dividends? a. Financing activities b. Investing activities c. Liquidity activities d. Operating activities oountry
Discuss the factors that are likely to influence the desired level of cash of a companyb. Outline the advantages and disadvantages of using short term debt, as opposed to longterm debt, in the financing of working capital c. Why cash flows rather than profits are most desirable in financial management? d. Explain the term “agency relationships” and discuss the conflicts that might exist in therelationship between’i) Shareholder and managersii) Shareholders and creditorsWhat steps may be taken to overcome these conflicts?
Which of the following statements concerning the balance sheet is TRUE? a. Ob. C. Operating cash flow (OCF) should be the cash available to creditors. Assets on the balance sheet must be listed in the order in which they are repaid. Changes in depreciation expense affect a firm's cash position. d. The balance sheet shows the prices at which each individual investor purchased the company's stocks and bonds.
1. What is an investor’s objective in financial statement analysis? a. To determine if the firm is risky b. To determine the stability of earnings. c. To determine changes necessary to improve future performance d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream 2. The current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.
please answer all the question. 1. Identify two important variables to be considered when making an investment decision. 2. What must a company do in the long run to be able to provide a return to investors and creditors? 3. What is the primary objective of financial accounting? 4. Define net operating cash flows. Briefly explain why periodic net operating cash flows may not be a good indicator of future operating cash flows. 5. What is meant by GAAP? why should all companies follow GAAP in reporting to external users? 6. Explain the roles of the SEC and the FASB in the sitting of accounting standards.
Which of the following would increase cash flow for a firm? a. A purchase of fixed assets b. Cash sales c. Purchase of markatable securities d. Credit sales
a) What was the trend in dividends (if any) for the firm?b) What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt) for the firm? c) Critically evaluate the financial strength of each of the companie based on the evidence presented in the Statement of Cash Flow. d) evaluate the companies for lending purposes will you select the company for lending?
1. Capital structure is the: a. mix of current and long-term assets, such as cash and fixed assets (plants and equipment). b. term a firm has on its equity, such as dividend payment schedules, stock repurchase agreements, etc. c. mix of equity, such as common stock, preferred stock, paid-in capital, and retained earnings. d. mix of debt and equity the firm uses to finance operations and asset purchases. 2. In computing the cost of capital, the cost of debt capital is determined by a. interest rate times (1 – the firm’s tax rate) b. annual interest payment divided by the proceeds from debt issuance. c. annual interest payment divided by the book value of the debt. d. the capital asset pricing model. 3. If a bond's value rises above its par value during its life, interest rates have: a. gone up. b. Gone down. c. there is no correlation with interest rates d. stayed the same
Which of the following is a potential source of capital for a company to invest in long-term assets? Select one: A. Bank loans B. Net Income from past years C. Issuing additional common stock D. Issuing bonds E. All of the above

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