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Principles of Finance

Problems

Principles of FinanceProblems

Problems

1 .
Rickey’s Retail has the following financial information for the most recent accounting period. Prepare an income statement.

2 .
Big Box has the following accounts. In which section of its classified balance sheet does each belong?
  • Cash
  • Wages payable
  • Taxes payable
  • Accounts receivable
  • Retained earnings
  • Common stock
  • Land
  • Note payable due in 10 years
  • Prepaid insurance
3 .
Big Box Outlet has $10,350 of supplies expense on its income statement. Does this mean that there must also be a supplies payable account balance of $10,350 on its balance sheet? Why or why not?
4 .
What are the three key types of dividends a firm might distribute to their shareholders? Describe each.
5 .
Big Box Outlet had an increase in its accounts payable account this period and a decrease in its accounts receivable, took out a long-term note payable, paid dividends to its shareholders, had depreciation on its equipment, bought new equipment, increased its inventory account, and repaid a bond. In which section of the statement of cash flows would each of these items appear?
6 .
Kokoya’s Firm calculates its free cash flow at only $2,000, which the company feels is quite low based on its historical performance and compared to others in its industry. What actions might Kokoya’s Firm take to improve its overall cash flow?
7 .
Complete the common-size income statement for Big Box Outlet using the information below:

8 .
List at least eight items commonly found in a firm’s annual report filed with the SEC.
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