Student name:__________

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Teddy's Pillows had beginning net fixed assets of $459 and ending net fixed assets of $526.
Assets valued at $307 were sold during the year. Depreciation was $18. What is the amount
of net capital spending?
A) $49
B) $85
C) $392
D) $67
E) $237

2) At the beginning of the year, long-term debt of a firm is $296 and total debt is $333. At the
end of the year, long-term debt is $263 and total debt is $343. The interest paid is $29. What
is the amount of the cash flow to creditors?
A) $33
B) –$33
C) –$62
D) $62
E) $29

3) Peggy Grey's Cookies has net income of $410. The firm pays out 37 percent of the net
income to its shareholders as dividends. During the year, the company sold $86 worth of
common stock. What is the cash flow to stockholders?
A) $237.70
B) $119.88
C) $151.70
D) $65.70
E) $258.30

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4) Micro, Incorporated, started the year with net fixed assets of $74,550. At the end of the year,
there was $95,650 in the same account, and the company's income statement showed
depreciation expense of $12,700 for the year. What was the company's net capital spending
for the year?
A) $41,695
B) $39,285
C) $82,950
D) $33,800
E) $21,100

5) At the beginning of the year, Nothing More Corporation had a long-term debt balance of
$37,679. During the year, the company repaid a long-term loan in the amount of $10,489.
The company paid $4,045 in interest during the year, and opened a new long-term loan for
$9,235. What was the cash flow to creditors during the year?
A) $6,444
B) $5,299
C) $13,910
D) $5,190
E) $1,254

6) For the past year, Kayla, Incorporated, has sales of $44,042, interest expense of $2,918, cost
of goods sold of $14,559, selling and administrative expense of $10,626, and depreciation of
$4,675. If the tax rate is 21 percent, what is the operating cash flow?
A) $11,264
B) $16,492
C) $11,997
D) $7,322
E) $13,542

7) At the beginning of the year, Vendors, Incorporated, had owners' equity of $48,095. During
the year, net income was $4,575 and the company paid dividends of $3,395. The company
also repurchased $7,045 in equity. What was the cash flow to stockholders for the year?
A) −$3,650
B) $3,650
C) $8,225
D) −$10,440
E) $10,440

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8) Evil Pop Company began the year with net fixed assets of $17,663 and had $19,058 in the
account at the end of the year. During the year, the company paid $4,414 in interest and
expensed $3,915 in depreciation. The company purchased $9,270 in fixed assets during the
year. How much in fixed assets did the company sell during the year?
A) $4,376
B) $896
C) $9,760
D) $3,960
E) $6,251

9) The Primus Corporation began the year with $6,686 in its long-term debt account and ended
the year with $8,046 in long-term debt. The company paid $651 in interest during the year
and issued $2,010 in new long-term debt. How much in long-term debt must the company
have paid off during the year?
A) $1,360
B) $413
C) $650
D) −$709
E) −$1,360

10) Hurricane Industries had a net income of $134,250 and paid 40 percent of this amount to
shareholders in dividends. During the year, the company sold $83,250 in new common stock.
What was the company's cash flow to stockholders?
A) $53,700
B) −$29,550
C) $51,000
D) −$53,700
E) $29,550

11) Kerch Company had beginning net fixed assets of $216,462, ending net fixed assets of
$211,638, and depreciation of $40,399. During the year, the company sold fixed assets with a
book value of $7,894. How much did the company purchase in new fixed assets?
A) $34,123
B) $41,306
C) $35,575
D) $32,505
E) $43,469

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12) Adison Winery had beginning long-term debt of $37,761 and ending long-term debt of
$43,118. The beginning and ending total debt balances were $46,693 and $51,620,
respectively. The company paid interest of $4,201 during the year. What was the company's
cash flow to creditors?
A) −$1,156
B) $726
C) $9,128
D) −$726
E) $5,357

13) Muffy's Muffins had net income of $2,850. The firm retains 60 percent of net income.
During the year, the company sold $745 in common stock. What was the cash flow to
shareholders?
A) $965
B) $1,140
C) $2,455
D) $395
E) $1,885

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Answer Key
Test name: chapter 3 cf from fin statements

1) B
Net capital spending = $526 (ending net fixed assets) + 18 (Depreciation) – 459 (beginning net
fixed assets)
Net capital spending = $85

2) D
CFC = $29 – ($263 – 296) = $62

3) D
CFS = (.37 × $410) – $86 = $65.70

4) D
Net capital spending = $95,650 − 74,550 + 12,700 = $33,800

5) B
Cash flow to creditors = $10,489 + 4,045 − 9,235 = $5,299

6) B
EBIT = $44,042 − 14,559 − 10,626 − 4,675 = $14,182

EBT = $14,182 − 2,918 = $11,264

Taxes = $11,264(.21) = $2,365

OCF = $14,182 + 4,675 − 2,365 = $16,492

7) E
Cash flow to stockholders = $3,395 + 7,045 = $10,440

8) D
Net capital spending = $19,058 − 17,663 + 3,915 = $5,310

Fixed assets sold = $9,270 − 5,310 = $3,960

9) C

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Net new borrowing = $8,046 − 6,686 = $1,360

Debt retired = $2,010 − 1,360 = $650

10) B
Cash flow to stockholders = $134,250(.40) − 83,250 = −$29,550

11) E
Net capital spending = $211,638 − 216,462 + 40,399 = $35,575

Fixed assets bought = $35,575 + 7,894 = $43,469

12) A
Cash flow to creditors = $4,201 − ($43,118 − 37,761) = −$1,156

13) D
Cash flow to stockholders = (1 − .60) × $2,850 − 745 = $395

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