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?
This long-lived, tangible asset should not be depreciated
What is LAND!?
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 method of depreciation results in the same depreciation expense in each year
What is straight-line method?
(Cost - Residual)*(1/Useful Life in Years)
This ratio calculates the percentage of economic resources financed via liabilities
What is debt-to-assets?
This is the journal entry for the date 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?
The purpose of this process is to recognize expenses associated with related revenues in the same period, with regards to tangible, long-lived assets
What is depreciation?
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
Net Book Value is calculated as
Cost - A/D (NOT related to market value!)
G/L on sale = SP - NBV
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 ?
Buying a company for more than the fair value of its net assets results in the recording of this balance sheet account
What is goodwill?