You are given the following information for McGee Corporation.
Prepare (in good form) a balance sheet for 2018 for the company.
2018 Accounts Receivable $2,480 Property, Plant and Equipment
16,400 Cash 13,300 Accumulated Depreciation 6,020 Inventory 5,800
Accounts Payable 11,800 Common stock 9,990 Long-Term Debt 7,800
Retained Earnings 2,370 10. Select all that is/are true about the
cash flows of a firm
a. In measuring free cash flows we are more interested in considering cash flows from an accounting perspective rather than the perspective of the firm’s shareholders and investors.
b. Net cash flow does not include after-tax interest expense.
c. While an income statement measures a company’s profits, profits are not the same as cash flows; profits are calculated on a cash basis rather than an accrual basis.
d. A firm which invested more cash in assets and working capital than operations, will have a positive operating cash flow and a negative cash flow from assets.
e. Free cash flow from an operating perspective must equal free cash flow from a financing perspective
f. If dividends paid is greater than net equity sold for the year, then the cash flow to stockholders is negative.
g. FCF may be defined as net operating profit after taxes (NOPAT) minus the amount of net investment in operating working capital and fixed assets necessary to sustain the business.
Select all that is/are true about the role of financial managers and the types of financial decisions they make.
a. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake.
b. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm.
c. Capital Budgeting function involves planning and determining the firm’s short term investments.
d. Size and timing of cash flows is important in a capital budgeting decision.
e. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets.
f. Determining the appropriate level of inventory is a working capital management function.
4. Financial Analysis is not just a tool for financial mangers within the firm. Identify the groups of users to the most appropriate way in which they may use financial ratio analysis
. a) ___________________ to compare investment among companies.
b) ____________to compare performance over time.
c) _________ may want to evaluate the chances of being repaid money they may have lent to the organization.
d) ____________________ to assess organizational or industry financial health and performance.
e) _________________may want to determine credit worthiness.
f) _____________ to decide whether or not to grant credit to a company.
a. In measuring free cash flows we are more interested in considering cash flows from an accounting perspective rather than the perspective of the firm’s shareholders and investors.
b. Net cash flow does not include after-tax interest expense.
c. While an income statement measures a company’s profits, profits are not the same as cash flows; profits are calculated on a cash basis rather than an accrual basis.
d. A firm which invested more cash in assets and working capital than operations, will have a positive operating cash flow and a negative cash flow from assets.
e. Free cash flow from an operating perspective must equal free cash flow from a financing perspective
f. If dividends paid is greater than net equity sold for the year, then the cash flow to stockholders is negative.
g. FCF may be defined as net operating profit after taxes (NOPAT) minus the amount of net investment in operating working capital and fixed assets necessary to sustain the business.
Select all that is/are true about the role of financial managers and the types of financial decisions they make.
a. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake.
b. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm.
c. Capital Budgeting function involves planning and determining the firm’s short term investments.
d. Size and timing of cash flows is important in a capital budgeting decision.
e. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets.
f. Determining the appropriate level of inventory is a working capital management function.
4. Financial Analysis is not just a tool for financial mangers within the firm. Identify the groups of users to the most appropriate way in which they may use financial ratio analysis
. a) ___________________ to compare investment among companies.
b) ____________to compare performance over time.
c) _________ may want to evaluate the chances of being repaid money they may have lent to the organization.
d) ____________________ to assess organizational or industry financial health and performance.
e) _________________may want to determine credit worthiness.
f) _____________ to decide whether or not to grant credit to a company.
