- Net working capital is defined as:
current assets minus current liabilities.
2. Cash flow from assets is also known as the firm’s:
free cash flow.
3. Cash flow to stockholders is defined as:
dividend payments less net new equity raised.
4. Which of the following are current assets?
I. patent
II. inventory
III. accounts payable
IV. cash
II and IV only
5. Which one of the following accounts is the most liquid?
accounts receivable
6. For a tax-paying firm, an increase in _____ will cause the cash flow from assets to increase.
depreciation
7. A firm has $520 in inventory, $1,860 in fixed assets, $190 in accounts receivables, $210 in accounts payable, and $70 in cash. What is the amount of the current assets?
$780
8. A firm has net working capital of $640. Long-term debt is $4,180, total assets are $6,230, and fixed assets are $3,910. What is the amount of the total liabilities?
$5,860
9. The Daily News had net income of $121,600 of which 40 percent was distributed to the shareholders as dividends. During the year, the company sold $75,000 worth of common stock. What is the cash flow to stockholders?
-$26,360
10. The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940. The 2011 balance sheet showed current assets of $1,640 and current liabilities of $1,140. What was the change in net working capital for 2011?
$80
11. Module 2 is based on chapter ___ of the book.
3
12. Liquid firms are ___________ likely to experience financial distress
less
13. Market value tends to be _____________a company’s book value .
greater than
14. The cash flow statement complements the balance sheet and income statement and is mandatory.
True
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