Solution-Find the net cash provided by or used in investing

Find the net cash provided by or used in investing activitie

Reference no: EM13856205

1. For each pair of firms, choose the one that you think would be more sensitive to the business cycle.

a. General Autos or General Pharmaceuticals.
- General Autos
- General Pharmaceuticals

b. Friendly Airlines or Happy Cinemas
- Friendly Airlines
- Happy Cinemas

2. A fine has an ROE of 4.5%. a debt-to-equity ratio of 0.8. a tax rate of 40%. and pays an interest rate of 5% on its debt. What is its operating ROA?

3. The following is cash flow data for Rocket Transport:

Cash dividend	$91.00
Purchase of bus	$29.00
Interest paid on debt	$25,000
Sales of old equipment	$55.5
Repurchase of stock	$92
Cash payments to suppliers	$125
Cash collections from customers	$410

a. Find the net cash provided by or used in investing activities

b. Find the net cash provided by or used in financing activities.

c. Find the net increase or decrease in cash for the year.

4. _______provides a snapshot of the financial condition of the firm at a particular time.

- The balance sheet
- The income statement
- The statement of cash flows
- All of the options
- None of the options

5. ______is a report of the cash flow generated by the firm's operations. investments and financial activities.

- The balance sheet

- The income statement

- The statement of cash flows

- The auditor's statement of financial condition

- None of the options

6. If the interest rate on debt is higher than ROA. a firm will________by increasing the use of debt in the capital structure.

- increase the ROE
- not change the ROE
- decrease the ROE
- change the ROE in an indeterminable manner

The financial statements of Black Barn Company are given below.

Black Barn Company Income Statement (2009)
Sales	$8.000.000
Cost of goods sold	5.260.000
Gross profit	2.740.000
Selling and administrative expenses	1.500.000
Operating profit	1.240.000
Interest expenses	140.000
Income before tax	1.100.000
Tax expense	440.000
Net income	$660.000

Balance Sheet
	2009	2008
Cash	3200.000	$50.000
Accounts receivable	1.200.000	950.000
Inventory	1.840.000	1.500.000
Total current assets	3.240.000	2.500.000
Fixed assets	3.200.000	3.000.000
Total assets	36.440.000	35.500.000
Accounts payable	800.000	720.000
Bank loan	600.000	100.000
Total current liabilities	1.400.000	820.000
Bonds payable	900.000	1.000.000
Total liabilities	2.300.000	1.820.000
Common stock(130.000 shares)	300.000	300.000
Retained earnings	3.840.000	3.380.000
Total liabilities & equity	36.440.000	$5.500.000
Note: The common shares are trading in the stock market for $40 each.

Refer to the financial statements of Black Barn Company. The firm's current ratio for 2009 is

- 2.31.
- 1.87.
- 2.22.
- 2.46.

Balance Sheet
	2009	2008
Cash	$200.000	$50.000
Accounts receivable	1.200.000	950.000
Inventory	1.840.000	1.500,000
Total current assets	3.240.000	2.500.0o0
Fixed assets	3,200,000	3.000.000
Total assets	$6.440,000	$5.500.000
Accounts payable	800.000	720.000
Bank loan	600.000	100.000
Total current liabilities	1.400.000	820.000
Bonds payable	900,000	1,000,000
Total liabilities	2.300.000	1.820.000
Common stock(130.000 shares)	300.000	300.000
Retained earnings	3.840.000	3.380.000
Total liabilities R equity	$6.440.000	$5.500.000
Note: The common shares are trading in the stock market for $40 each.

Refer to the financial statements of Black Barn Company. The firm's leverage ratio for 2009 Is

- 1.65.
- 1.89.
- 2.64.
- 131
- 1.56.

9. A firm has an ROA of 14%. a debt/equity ratio of 0.8. a tax rate of 35% and the interest rate on the debt is 10%. The firm's ROE is

- 11.18%.
- 8.97%
- 11.54%.
- 12.62%.

10.

Midwest Tours Income Statement (2009)
Sales	$2,500,000
Cost of goods sold	1.260.000
Gross profit	1.240.000
Selling and administrative expenses	700.000
Operating profit	540.000
Interest expenses	160.000
Income before tax	380.000
Tax expense	152.000
Net income	$228,000
Midwest Tours
Balance Sheet
	2009	2008
Cash	$60,000	$50,000
Accounts receivable	500..000	450..000
Inventory	300..000	270.000
Total current assets	860.000	770.000
Fixed assets	2.180.000	2.000.000
Total assets	$3.040.000	$2.770.000
Accounts payable	200.000	170.000
Bank loan	460.000	440,000
Total current liabilities	660.000	610.000
Bonds payable	860.000	860.000
Total liabilities	1.520.000	1.470.000
Common stock (30.000 shares)	120.000	120.000
Retained earnings	1.400.000	1.300.000
Total liabilities & Equity	$3,040.000	$2.890.000
Note: The common shares are trading in the stock market for $36 each.

Refer to the financial statements of Midwest Tours. The firm's PrE ratio for 2009 is
- 4.74.
- 6.63.
- 5.21.
- 5.00.

11. Which of the financial statements recognizes only transactions In which cash changes hands?

- Balance sheet
- Income statement
- Statement of cash flows
- Balance sheet and income statement
- All of the options

12. Consider two firms producing smart phones. One uses a highly automated robotics process. whereas the other uses workers on an assembly line and pays overtime when there is heavy production demand.

a-1 Which firm will have higher profits in a recession?

Robotics firm.

Workers firm.

a-2 Which firm will have higher profits in a boom?

Robotics firm.

Workers firm.

b. Which firm's stock will have a higher beta?
Robotics firm.
Workers firm.

13. The most widely used monetary tool is
- altering the discount rate.
- altering the reserve requirements.
- open market operations.
- altering marginal tax rates.
- None of the options

14. If the economy is shrinking. firms with high operating leverage will experience
- higher decreases In profits than firms with low operating leverage.
- similar decreases in profits as firms with low operating leverage.
- smaller decreases in profits than firms with low operating leverage.
- no change In profits.

15. Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50¢ per widget. Firm B has total fixed costs of $240,000 and variable costs of 75¢ per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets.

Calculate firm A's degree of operating leverage.

- 11.0

- 2.86

- 9.09

- 1.00

Reference no: EM13856205

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Find the net cash provided by or used in investing activitie

Reference no: EM13856205

Reference no: EM13856205

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