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7 Which one of the fllowing atatements is coreet Shareholders equity is the residual value of a fim Net working capital must be a positive value. C An increase in cash reduces the liquidity of a firm D. Equipment is generally considered a highly liquid asset Depreciation increases total assets. 8. Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing? A. Du Pont rate B. External growth rate CSustainable growth rate D. Internal growth rate E. Cash flow rate 9. Highly liquid assets: A. increase the probability a firm will face financial distress. B. appear on the right side of a balance sheet. C generally produce a high rate of return. D, can be sold quickly at close to full value E include all intangible assets PROBLEMS 1. The Good Life Store has sales of $79,600. The cost of goods sold is $48,200 and the other costs are $18,700. Depreciation is $8,300 and the tax rate is 34 percent. What is the net income? A. $2,904 B. $8,382 C S11,204 D. $14,660 E. $16,682 eles 4808 CaS THAL-39% 2. For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200. What is the amount of the dividends paid? A. S100 B. $7,600 C. 57,500 D. $15,100 E. $16,700 318004 75C0-2 E-31g 3. A firm has sales of S131,000 and inventory of $12.200. The common-size income statement lists cost of goods sold at 67 percent and depreciation at 5 percent What in the inventory tumover ratio? A 50.73 times B. 44.30 times C. 8.24 times D. 7.19 times Sev-h cey 5% 4. Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100, What is the value of the net working capital? A. S10,100 B. S10,400 C. $18,900 D. $21,300 E. $23,200 Th 31 3cO LTD Gc NfA 15co o 21,1c0 WG 5. A firm has total assets of $523,100, current assets of $186,500, current liabilities of $141,000, and total debt of $215,000. What is the debt-equity ratio? A. 0.48 TA 523/00 B. 0.70 C. 1.10 D. 1.43 E. 2.13 T6: 3/5000 6. During the past year, Ernst Electrical Services paid $36,800 in interest along with $48,000 in dividends. The company issued $130,000 of stock and $100,000 of new debt. The company reduced the balance due on the old debt by $225,000. What is the amount of the cash flow to creditorst: 3se A.-$51,400 B. -$88,200 C. $161,800 D $211,600 E $231,500 CFC Sotp-(L -0 CFC 4-40000 Ste: 180c0 7. Paddle Fans& More has a marginal tax rate of 34 percent and an average tax rate 23.7 percent. If the firm earns $168,596 in taxable income, how much will it owe in taxes? AT 347 AT&-23% Tayadle Sreare A. $31,366.67 . $31,500.00 . $32,824.50 $39,957.25 $47,090.00 K68, 53 3. A firm has sales of $131,000 and inventory of $12,200. The common-size income statement lists cost of goods sold at 67 percent and depreciation at 5 percent. What is the inventory turnover ratio? A 50.73 times B. 44.30 times Soles 11 e Jov-6200 7% C. 8.24 times D. 7.19 times ep- 5% 4. Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets $19,300, and owners' equity of $21,100. What is the value of the net working capital A. $10,100 B. $10,400 C.$18,900 D. $21,300 E.$23,200 5. A firm has total assets of $523, 1 00, current assets of$186,500, current liabilit $141,000, and total debt of $215,000. What is the debt-equity ratio? A. 0.48 B. 0.70 C. 1.10 D. 1.43 E. 2.13 6. During the past year, Ernst Electrical Services paid $36,800 in interest al 548,000 in dividends. The company issued $130,000 of stock and $100,00C he company reduced the balance due on the old debt by $225,000. What f the cash flow to creditors? -$51,400 -$88,200 $161,800 211,600 231.500 12. Use the following taN table to answer this question Tasabie Iocome Tos Rate so bo0 50,001-175.000 75 001-100.009 TO0 001-1335.009 335 001-1o.000 000 25 24 39 34 The Stone Inn earned 5260,000 in taxable income for the year. How mmuch tax does the company owe on this income? What are the average and marginal taox rates for this company? BONUS QUESTION (3 Points) Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio? 8.The common stock of The Burger 3Hut is selling for S16.25 a share. The sompany ernings per share of s0.42 amd a book vale per ahane of s928 wha s the marke- book ratio A.1.75 B. 1.69 C. 1.58 D. 1.87 E1.92 9 The Noodle Place has total anets of S123,800, a deb rotio of 0.40, and net income of $7,100. What is the return on equity? 10. The Veggie Hut has net income of $26,400, total equity of $102,700, and total assets of $189,500 The dividend payout ratio is 0.30. What is the internal growth rate? 11. One year ago, you bought a stock for $36.48 a share. You received a dividend of $1.62 per share last month and sold the stock today for $40.18 a share. What is the capital gains yield on this investment

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