FIN/534 Homework Chapter 2 ( FIN 534 Homework Chapter 2 ) (***** FIN534 Homework Chapter 2 *****)
FIN 534 – Homework Chapter 2
Directions: Answer the following five questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. Each question is worth five points apiece for a total of 20 points for this homework assignment.
1. Which of the following statements is CORRECT?
a. Typically, a firm’s DPS should exceed its EPS.
b. Typically, a firm’s EBIT should exceed its EBITDA.
c. If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceed its book value per share.
d. If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation.
e. The more depreciation a firm has in a given year, the higher its EPS, other things held constant.
2. Which of the following statements is CORRECT?
a. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets.
b. The statement of cash flows shows where the firm’s cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit.
c. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital.
d. The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock.
e. The statement of cash flows shows how much the firm’s cash--the total of currency, bank deposits, and short-term liquid securities (or cash equivalents)--increased or decreased during a given year.
3. Which of the following statements is CORRECT?
a. Dividends paid reduce the net income that is reported on a company’s income statement.
b. If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
c. If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.
d. Accounts receivable are reported as a current liability on the balance sheet.
e. If a company pays more in dividends than it generates in net income, its retained. earnings as reported on the balance sheet will decline from the previous year's balance.
4. Last year Roussakis Company’s operations provided a negative net cash flow, yet the cash shown on its balance sheet increased. Which of the following statements could explain the increase in cash, assuming the company’s financial statements were prepared under generally accepted accounting principles?
a. The company repurchased some of its common stock.
b. The company dramatically increased its capital expenditures.
c. The company retired a large amount of its long-term debt.
d. The company sold some of its fixed assets.
e. The company had high depreciation expenses.
5. Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm's net income exceed its free cash flow?
FIN 534 Homework Chapter 2
FIN534 Homework Chapter 2
FIN/534 Homework Chapter 2
FIN 534 Week 2 Homework Chapter 2 (***** 100% Correct All 5 MCQ with explanation and calculation ******)
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FIN xxx Homework Chapter 2
FIN534 Homework Chapter x
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xxx xxx – xxxxxxxx Chapter 2
Directions: xxxxxx xxx following xxxx questions xx x separate xxxxxxxxx Explain xxx xxx reached xxx answer xx show your work xx x mathematical xxxxxxxxxxx xx needed, or both. xxxxxx xxxx assignment using xxx assignment link xx xxx course xxxxxx xxxx question xx worth five points apiece xxx a xxxxx xx 20 points for xxxx homework assignment.
xx xxxxx of xxx xxxxxxxxx xxxxxxxxxx xx CORRECT?
xx Typically, a firm’x xxx should exceed xxx xxxx
xx xxxxxxxxxx a firm’s xxxx should xxxxxx xxx xxxxxxx
c. If x firm xx xxxx xxxxxxxxxx than average xxxxxx xxxxxxxx we would xxxxxxxx expect xx xxx xxx stock price exceed xxx book value xxx share.
xx If a xxxx xx xxxx xxxxxxxxxx than xxxx xxxxx xxxxxx xx would normally expect xx see xxx xxxx xxxxx per share exceed xxx stock price, especially xxxxx several years of high inflation.
e. The xxxx xxxxxxxxxxxx a xxxx has xx x given xxxxx xxx xxxxxx xxx xxxx other things held xxxxxxxxx
For the xxxx
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