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Fin 370 Week 4 Team Assignment Caledonia Products Integrative Problem


Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects?

Cash flows reflect the timing of benefits and costs more accurately than accounting profits.

Which of the following could offset the higher risk exposure a company would face if

it’s current ratio and net working capital were relatively low?

Its current assets would need to be highly liquid. Explanation: High liquidity assets, such as cash, decreases the risk of presented by low overall working capital.

When the impact of taxes is considered, as the firm takes on more debt

Cash flows will increase because taxes will decrease. Explanation: Interest expenses are tax deductible, thus decreasing tax liabilities.

Accounting break-even analysis solves for the level of sales that will result in:

Net income = $

When calculating the weighted average cost of capital, which of the following has to be adjusted for taxes?

Debt Explanation: Debt is multiplied by (1-Tax Rate) in the WACC formula.

Which of the following statements best represents what finance is about?

Creation and maintenance of economic wealth

Apple Two Enterprises expects to generate sales of $5,, for fiscal ; sales were$3,, in fiscal Assume the following figures for the fiscal year ending cash $70,; accounts receivable $,; inventory $,; net fixed assets $,; accounts payable $,; and accruals $, Use the percent-of-sales method to forecast cash for the fiscal year ending

$, Explanation: / = x = ,

Final Exam Fin When complete, please submit your answers to your individual forum. DO NOT discuss this with any other person -- this is an individual final exam!!For the true false answers only submit the question number and answer -- do not include the question in your answer sheet. For other questions/problems, please show all of your work for full credit. One Excel attachment is preferred -- do not send in more than one attached woaknb.wz.sk Write 'T' if the statement is true and 'F' if the statement is false. (2 points total) woaknb.wz.sk maximization stresses the efficient use of timing and woaknb.wz.skial assets are tangible assets such as houses, equipment, and woaknb.wz.sk sustainable rate of growth represents the rate at which a firm’s sales can grow if it wants to maintain its present financial ratios and does not want to resort to a sale of new equity woaknb.wz.skss risk refers to the relative disperses in the firm’s expected earnings after interest and woaknb.wz.sk capital-budgeting projects are always new products taken to market.F6. The stock of cash is a type of inventory.T

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