FIN 300 Chapter 2: Chapter 2.docx

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taupewombat306

15 Mar 2012

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Chapter 2: financial statements: cash flow and taxes. Balance sheet f/s of accounting val on particular date, snapshot, summarize assets (owns), liabilities (owes), and equity (diff b/ 2) left side = right side. Assets = liabilities + sh equity in order of liquidity = length of time to convert to cash. Total liabilities and owners" equity reflects line of business. Current asset life less than 1 yr convert cash w/in 1 yr inventory, a/r. Fixed/ capital asset long life: tangible - truck. Liabilities and owners" equity: the right-hand side reflects use of debt. Current liabilities - life less than 1 yr / obligation paid w/in 1 yr listed b4 long term liabilities: a/p. Long term liability - debt not due w/in 1 yr sources for borrowing = bond and bondholders. Sh equity - if firm were to sell all of its assets and use $ to pay off debt --> residual val = belong to sh.

Related Questions

Total Current Asset Current Ratio Effect on Net Income

a		Cash is acquired through issuance of additional common stock		____		____		____
b	Merchandise is sold for cash		____		____		____
c	Federal income tax due for the previous year is paid		____		____		____
d	A fixed asset is sold for less than book value		____		____		____
e	A fixed asset is sold for more than book value		____		____		____
f	Merchandise is sold on credit		____		____		____
g	Payment is made to trade creditors for previous purchases		____		____		____
h	A cash dividend is declared and paid		____		____		____
I	Cash is obtained through short- term bank loans		____		____		____
J	Short- term notes receivable are sold at a discount		____		____		____
k	Marketable securities are sold below cost		____		____		____
L	Advances are made to employees		____		____		____
m	Current operating expenses are paid		____		____		____
n	Short- term promissory notes are issued to trade creditors in exchange for past due accounts payable		____		____		____
o	10- year notes are issued to pay off accounts payable		____		____		____
p	A fully depreciated asset is retired		____		____		____

4 DEBT RATIO- Bartley Barstools has an equity multiplier of 2.4, and its assets are financed with some combination of long-term debt and common equity. What is its equity ratio? What is its debt ratio?

6 MARKET/BOOK RATIO- Jaster Jets has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt and $6 billion in common equity. It has 800 million shares of common stock outstanding, and its stock price is $32 per share. What is Jaster

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FIN 300 Chapter 2: Chapter 2.docx

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