Depreciation and amortization expenses are

Depreciation and amortization expenses are

Subject: Business    / Finance
Question

Depreciation and amortization expenses are:

Part of current assets on the balance sheet.

After-tax expenses that reduce a firm’s cash flows.

Long-term liabilities that reduce a firm’s net worth.

Noncash expenses that cause a firm’s after-tax cash flows to exceed its net income.

Place the following items in order by their liquidity.
– 1. 2. 3. 4.

Accounts receivable

– 1. 2. 3. 4.

Plant and equipment

– 1. 2. 3. 4.

Inventories

– 1. 2. 3. 4.

Cash

Match the formula to its description.
– A. B. C. D. E. F. G.

Balance sheet identity
Read Answer Items for Question 13
– A. B. C. D. E. F. G.

Net working capital
Read Answer Items for Question 13
– A. B. C. D. E. F. G.

Income statement equation
Read Answer Items for Question 13
– A. B. C. D. E. F. G.

CFOA
Read Answer Items for Question 13
– A. B. C. D. E. F. G.

CFNWC
Read Answer Items for Question 13
– A. B. C. D. E. F. G.

CFLTA
Read Answer Items for Question 13
– A. B. C. D. E. F. G.

CFI
Read Answer Items for Question 13
Answer
A.

CFOA – CFNWC – CFLTA
B.

NWCcurrent period – NWCprevious period
C.

Total assets = Total liabilities + Total stockholder’s equity
D.

Long-term assetscurrent period – Long-term assetsprevious period
E.

Net income = Revenues – Expenses
F.

Total current assets – Total current liabilities
G.

EBIT – Current taxes + Noncash expenses

Diaz Manufacturing, Inc. reports EBIT of $168,000, current taxes of $44,000, and depreciation and amortization of $83,000. What is their cash flow from operating activities (CFOA)?

Suppose you start your own corporation when you are 25 years old and you work there until you retire 40 years later. How many years’ worth of your profits are taxed by the US Government if the average federal corporate income tax rate is 30 percent?