Multiple choice

1. How many of the following items decrease cash flow in the statement of cash flows? 

 Increase in accounts receivable

Increase in notes payable

Depreciation expense

Increase in investment

Decrease in account payable 

Decrease in prepaid expenses

Dividend payment 

Increase in accrued expenses

a. 2 of these items decrease cash  flow

b. 3 pf these items decrease cash flow

c.  4 of these items decrease cash flow

d. 5 of these items decrease cash flow

2. Given the following, what is the free cash flow?

Cash flow from operating activities            $175,000

Capital expenditure                                            35,000

Dividends                                                             25,000

a. $115,000

b. $235,000

c. $185,000

d. $165,000

3. Farah Snack Co. has earning after taxes of $128,750 interest expense for the year was $20,000 preferred dividends paid were $18,750 and common dividends paid were $30,000. Taxes were $15,000. The firm has $10,000 shares of common stock outstanding. Earning per share on the common stock was.

a. $0.90

b. $1.10

c.  $0.75

d. 0.80

4. The Bubba Corp. had net income before taxes of $200,000 and sales of 2,000,000. If it is in the 15% tax bracket its after-tax profit margin is:

a. 5%

b. 12%

c. 20%

d. 25%