Ch3 FINC-341 TAMU | Questions with 100 % Correct Answers | Verified

Sources of Cash? - CORRECT ANSWER-Selling Assets, Increasing Debts, or Increasing Equity Uses of Cash? - CORRECT ANSWER-Buying Assets, Paying off Debts, Buying back Equity IF [ # of shares] falls, THEN [ EPS ] ..... - CORRECT ANSWER-[ EPS ] will increase, as will stock price EPS Calculation - CORRECT ANSWER-[Net Income] / [# of Shares Outstanding] Accounting Profit (Finance term) - CORRECT ANSWER-Net Income Net Cash Flow Calculation - CORRECT ANSWER-[Net Income] + [Depreciation] Operating Cash Flow Calculation - CORRECT ANSWER-[Operating Income]*[ 1-Tax Rate] + [Depreciation] Net Operating Profit After Taxes Calculation - CORRECT ANSWER-[EBIT] * [1 - Tax Rate] Free Cash Flow Calculation - CORRECT ANSWER-|[Net Operating Profit after Taxes] + [Depreciation]| - |[ΔNet fixed assets] + [Depreciation]| - [ΔCurrent Assets] + |[ΔAccounts Payable]+[ΔAccruals]| Free Cash Flow - CORRECT ANSWER-Amount left over from operating cash flow after taking out all capital expenditures Market Value Added Calculation - CORRECT ANSWER-[# shares]*[Stock $] - [Total Common Equity] Market Value Added goal - CORRECT ANSWER-Maximization, to increase Stockholder wealth *CAN BE NEGATIVE* Economic Value Added Calculation - CORRECT ANSWER-[Net Operating Profit after Taxes] - ([Total Assets] - [Current Liabilities])*[WACC] WACC - CORRECT ANSWER-Weighted Average Cost of CapitalEVA meaning - CORRECT ANSWER-Shows managerial effectiveness and has strong correlation with stock price. If (+), then the ROE exceeds COE