Liabilities
What is $500 interest expense?
10,000 * .1 * 6/12
What is
(NI - Preferred Dividends)/Weighted Average Common Shares Outstanding ?
10/((4+6)/2) = 10/5 = $2 EPS
Cash inflows from customers would fall under this category of cash flows
What are operating cash flows?
Calculated as
(Net Income+Interest Expense+Income Tax Expense)/Interest Expense,
this ratio tells us about the ability of a company to meets its interest obligations using current earnings
What is times interest earned?
Payment of taxes with cash is this type of cash flow activity
What is a cash outflow from operations?
Bonds with a face value of $1,000 issued at 97 would be issued for this amount of cash
What is $970?
face value*% = issue price
***therefore issued at a discount***
A company charter states the company may sell 10M shares of stock. The company has sold 4M shares. The company later repurchases 500,000 shares of their own stock. These 500,000 shares are referred to as this
What is treasury stock?
Cash outflows to repay principal on a loan would fall under this category of cash flows
What are financing activities?
Discounting future cash flows allows us to calculate the ____ value of the cash flows
What is the present value? (relates to returns NOT purchasing power)
This journal entry records the payment of a cash dividend of $17,000.
What is
Dr. Dividends Payable 17,000
Cr. Cash 17,000
?
This ratio calculates the percentage of economic resources financed via liabilities
What is debt-to-assets?
This journal entry is made on the day a dividend is declared
What is
Dr. Dividends xx
Cr. Dividends Payable xx ?
Cash paid for and received from sales of PP&E and investments in other companies are this type of cash flow
What are investing cash flows?
$1 today is worth more than $1 10 years from now due to this
What is compounding or potential for returns?
WFH corporation is authorized to sell up to 75,000 shares. On February 7, WFH issued 25,000 shares. On November 19, WFH repurchased 5,000 of its own shares from the shareholders. Assuming no other stock-related transactions take place, the number of shares issued and outstanding at year end is ____
What is 20,000 shares issued & outstanding at YE?
Current liabilities include all the following except:
An obligation due in 2 years
An obligation due in 6 months
The current portion of a long-term debt
What is the obligation due in 2 years?
Record the journal entry for the issuance of $1 par value 1,000 new shares of stock at $7 each.
What is
Dr. Cash 7,000
Cr. Common Stock 1,000
Cr. Additional Paid-in-Capital 6,000 ?
Interest paid in cash is this type of cash flow
What are operating cash flows?
The present value of $100 to be received in 5 years given an annual rate of return of 7% is ___ (round to nearest dollar)
What is $71 ?
$100*.71299
PV(r=7%, n=5) = .71299
Regardless of the initial issuance price, this journal entry is made when bonds with a $10,00 face value are retired at maturity.
What is
Dr. Bonds Payable 10,000
Cr. Cash 10,000
?
The journal entries to record these transactions are _____ :
a. Oct. 7th: the sale of 50 season ticket packages for 10 home games for $100 a package
b. April 9th: The revenue from playing the first of 10 home games from the package
What is
Oct. 7 Dr. Cash 5,000
Cr. Unearned Revenue 5,000
April 9 Dr. Unearned Revenue 500
Cr. Service Revenue 500
Treasury shares are accounted for with this journal entry
What is
Dr. Treasury Stock (-SE) xx
Cr. Cash (-A) xx ?
Depreciation is _____ (added back to/subtracted from) Net Income when calculating Cash Flows from Operations using the Indirect Method
What is added back?
Your very risk-averse client has $100,000 in their money market account today. The client wants to have $750,000 30 years from now. Given an annual 5% return, the amount needed to be deposited into a bank account today is ___
PV(r=5%, n=30) = 0.23138
$750,000 * 0.23138 = $173,535 - $100,000 = What is $73,535 more to deposit today ?
The vast majority of companies use this method of calculating cash flows from operations, which begins with the accrual basis Net Income
What is the indirect method?