Business finance midterm 1 Questions and
Answers Grade A+ 2023
balance sheet --financial statement that reflects a firm's accounting value on a particular date
-shareholders equity --the residual value of a corporation after all debts have been paid. consists
of paid in surplus, common stock, and retained earnings
-net working capital --the difference between a firm's current assets and its current liabilities.
accounts payable, cash, inventory
-income statement --reflects a firms performance over a period of time
-earnings per share --amount of net income attributable to each share of stock
-non-cash item --expense charged against revenues that does not affect the cash flow of a firm
-average tax rate --total tax paid/total taxable income
-marginal tax rate --amount tax payable on next taxable dollar earned
-operating cash flow --cash generated from a firms normal business activities
-cash flow from assets --cash available to distribute to the creditors and to the stockholders
-capital spending --the net amount of a firms cash flows that are spent on fixed assets(long life)
-free cash flow --another term for cash flow from assets
-cash flow to creditors --(interest paid) - (net new borrowing)
-cash flow to stockholders --(amount of the dividends paid) - (net new equity raised)
-fixed assets --the book value of fixed assets decreases over time
-intangible assets --fixed assets like trademarks, usually have a life of a year or more
-long term debt --net working capital + total fixed assets - owners equity
-holding highly liquid assets... --tends to reduce the potential profits as compared to holding less
liquid assets
-financial leverage --the greater the ____, the greater the level of debt. greater ____ , when
overextended, can lead to bankruptcy
Answers Grade A+ 2023
balance sheet --financial statement that reflects a firm's accounting value on a particular date
-shareholders equity --the residual value of a corporation after all debts have been paid. consists
of paid in surplus, common stock, and retained earnings
-net working capital --the difference between a firm's current assets and its current liabilities.
accounts payable, cash, inventory
-income statement --reflects a firms performance over a period of time
-earnings per share --amount of net income attributable to each share of stock
-non-cash item --expense charged against revenues that does not affect the cash flow of a firm
-average tax rate --total tax paid/total taxable income
-marginal tax rate --amount tax payable on next taxable dollar earned
-operating cash flow --cash generated from a firms normal business activities
-cash flow from assets --cash available to distribute to the creditors and to the stockholders
-capital spending --the net amount of a firms cash flows that are spent on fixed assets(long life)
-free cash flow --another term for cash flow from assets
-cash flow to creditors --(interest paid) - (net new borrowing)
-cash flow to stockholders --(amount of the dividends paid) - (net new equity raised)
-fixed assets --the book value of fixed assets decreases over time
-intangible assets --fixed assets like trademarks, usually have a life of a year or more
-long term debt --net working capital + total fixed assets - owners equity
-holding highly liquid assets... --tends to reduce the potential profits as compared to holding less
liquid assets
-financial leverage --the greater the ____, the greater the level of debt. greater ____ , when
overextended, can lead to bankruptcy
