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Exam 3: Financial Statements,cash Flow and Taxes

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Question 41

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During 2019,Bascom Bakery paid out $33,525 of common dividends.It ended the year with $215,000 of retained earnings versus the prior year's retained earnings of $159,600.How much net income did the firm earn during the year?

A) $80,033
B) $84,479
C) $77,365
D) $88,925
E) $72,919

F) A) and B)
G) A) and D)

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Question 42

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Griffey Communications recently realized $120,000 in operating income.The company had interest income of $25,000 and realized $70,000 in dividend income.The company's interest expense was $40,000.Its corporate tax rate is 25%.Griffey is a small company,so it is not subject to the interest expense deduction limitation. Assume a 50% dividend exclusion for tax on dividends.

A) $37,000
B) $35,950
C) $35,000
D) $32,000
E) $40,400

F) A) and E)
G) C) and E)

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Question 43

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Net operating working capital is equal to current assets less excess cash minus the difference between current liabilities and notes payable.

Allen Corporation can (1) build a new plant that should generate a before-tax return of 10.00%,or (2) invest the same funds in the preferred stock of Florida Power & Light (FPL) ,which should provide Allen with a before-tax return of 9.00%,all in the form of dividends.Assume that Allen's marginal tax rate is 25.00%,and that 50.00% of dividends received are excluded from taxable income.If the plant project is divisible into small increments,and if the two investments are equally risky,what combination of these two possibilities will maximize Allen's effective return on the money invested? (Round your final answer to two decimal places. )

Other things held constant,which of the following actions would increase the amount of cash on a company's balance sheet?

The time dimension is important in financial statement analysis.The balance sheet shows the firm's financial position at a given point in time,the income statement shows results over a period of time,and the statement of cash flows reflects specific changes in accounts over that period of time.

The annual report contains four basic financial statements: the income statement,the balance sheet,the cash flow statement,and the statement of stockholders' equity.

Maureen Smith is a single individual.She claims a standard deduction of $12,000.Her salary for the year was $177,100.Assume the following tax table is applicable. Single Individuals What is her federal tax liability? ​

On 12/31/19,Hite Industries reported retained earnings of $537,500 on its balance sheet,and it reported that it had $135,000 of net income during the year.On its previous balance sheet,at 12/31/18,the company had reported $445,000 of retained earnings.No shares were repurchased during 2019.How much in dividends did the firm pay during 2019?

Moose Industries has a corporate tax rate of 25%.Last year the company realized $14,000,000 in operating income (EBIT) .Its annual interest expense is $1,500,000.What was the company's net income for the year?

On its 12/31/19 balance sheet,Barnes Inc showed $510 million of retained earnings,and exactly that same amount was shown the previous year.Assuming that no earnings restatements were issued,which of the following statements is CORRECT?

Which of the following statements is CORRECT?

If the tax laws were changed so that $0.50 out of every $1.00 of interest paid by a corporation was allowed as a tax-deductible expense,companies would be encouraged to use more debt financing than they presently do,other things held constant.

The income statement shows the difference between a firm's income and its costs-i.e. ,its profits-during a specified period of time.However,not all reported income comes in the form of cash,and reported costs likewise may not be consistent with cash outlays.Therefore,there may be a substantial difference between a firm's reported profits and its actual cash flow for the same period.

A corporation recently purchased some preferred stock that has a before-tax yield of 8.00%.The company has a tax rate of 25%.What is the after-tax return on the preferred stock? Assume a 50% dividend exclusion for tax on dividends.(Round your final answer to two decimal places. )

Your corporation has a marginal tax rate of 25% and has purchased preferred stock in another company.The before-tax dividend yield on the preferred stock is 7.25%.What is the company's after-tax return on the preferred,assuming a 50% dividend exclusion? (Round your final answer to two decimal places. )

Austin Financial recently announced that its net income increased sharply from the previous year,yet its net cash provided from operations declined.Which of the following could explain this performance?

Which of the following statements is CORRECT?

Granville Co.recently purchased several shares of Kalvaria Electronics' preferred stock.The preferred stock has a before-tax yield of 6.10%.If the company's tax rate is 25%,what is Granville Co.'s after-tax yield on the preferred stock? Assume a 50% dividend exclusion for tax on dividends.(Round your final answer to two decimal places. )

Which of the following statements is CORRECT?