MGMT640 Homework 2 Latest 2021 January

MGMT640 Financial Decision Making for Managers

Homework 2

Question 1Trevi Corporation recently reported an EBITDA of $31,400 and $9,700 of net income. The company has $6,700 interest expense, and the corporate tax rate is 35 percent. What was the company’s depreciation and amortization expense? Round to the nearest cent.

Question 2Working capital: Winston Electronics reported the following information at its annual meetings. The company had cash and marketable securities worth $1,236,091, accounts payables worth $4,160,029, inventory of $7,122,896, accounts receivables of $3,489,587, notes payable worth $1,152,267, and other current assets of $121,558. What is the company’s net working capital?

Question 3The difference between FIFO and LIFO is FIFO  refers to the practice of firms, when making sales, assuming that the inventory that came in last (at a higher price) is being sold first. LIFO implies that a firm is selling the lower cost, older inventory first, leaving the higher cost, newer inventory on the balance sheet.

                True

                False

Question 4Which of the following balance sheet items generally takes the longest time to convert to cash?

marketable securities

accounts payable

inventory

accounts receivable

Question 5A firm’s net income may be greater than its net cash flows because the firm

sold merchandise on credit

did not pay dividends

deferred income taxes

deducted depreciation expense

Question 6The average tax rate is

the tax rate that is paid on the last dollar of income earned

always higher than the marginal tax rate

calculated by dividing the total taxes paid by the taxable income

none of the above

Question 7If Cleveland Motors Had an EBIT of $22,753,800, Interest of $7,462,600 and is taxed at an average rate of 32% what is their Net Income? Round to the nearest cent.

Question 8Using the information below — what was Bala Industries’ Cash Flow from Financing for the year ending 6/30/2011? Round to the nearest cent.

Increase in inventories                     $27

Purchased treasury stock                $21

Purchased property & equipment    $25

Net Income                                      $340

Decrease in accrued income taxes  $45

Depreciation & amortization             $119

Decrease in accounts payable         $12

Increase in accounts receivable       $28

Increase in Long-term debt             $109

Question 9Which of the following is a tax deductible expense for a corporation?

common stock

dividends paid

loan principal paid

interest paid

Question 10Delta Ray Brands Corp. just completed their  latest fiscal year. The firm had sales of $16,961,600. Depreciation and  amortization was $855,100, interest expense for the year was $860,200, and  selling general and administrative expenses totaled $1,560,600 for the year,  and cost of goods sold was $10,060,400 for the year. Assuming a federal income  tax rate of 34%, what was the Delta Ray Brands net income after-tax? Round to the nearest cent.