Which of the below are the correct adjustments we make to a company's EBIT to arrive at its FCFF?Select all that apply.Select All That ApplyABDEFTake out taxesSubtract depreciation and amortizationSubtract capital expendituresAdd back acquisition expensesSubtract changes in net working capitalAdd back R&D expenses?

FCFF represents free cash flow to firm.It is the amount of cash flow available to the firm after…

Answered: Which of the below are the correct…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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PROBLEM The balance sheet contains the following major sections: a. Current assets b. Long-term investments c. Property, plant, and equipment d. Intangible assets e. Other assets f. Current liabilities g. Long-term liabilities h. Contributed capital i. Retained earnings j. Accumulated other comprehensive income _____ 1. Unexperied insurance _____ 2. Idle machinery _____ 3. Unrealized increase in avaiblable for sale securities _____ 4. Land _____ 5. Fund to retire preferred stock _____ 6. Additional paid-in capital on common stock _____ 7. Deferred income taxes-noncurrent _____ 8. Obligation for future pension payments _____ 9. Trademark _____ 10. Unearned ticket sales Required: Using the letters (a) through (j), indicate in what section the accounts would be classified.
Capital Expenditures are Select one: O a. Expenses incurred when purchasing non-current assets b. Expenses related to Business Operation c. None of the these O d. Reduces profit
(b) With respect to capital budgeting decisions, explain the terms “mutual exclusivity”,“replacement decisions” and “retirement decisions”. (c) Explain briefly the key steps that should be included in a company’s capital budgetingprocess.
The calculation of a hurdle rate when looking capital expenditures involves looking at what financial metrics to determine the firm's hurdle rate? Upon determining the hurdle rate, how is a potential CAPEX assessed against the hurdle rate to insure ROI meets or exceeds the firms calculated hurdle? Would appreciate a verbal explanation and a calculated formulaic example if possible please! Thank you.
3. The capital introduced by the owner will be treated as; Group of answer choices Liability Contra-Asset Asset Long-term investment 4. For every debit (Dr) there has to be an equal and corresponding credit (Cr), this is the rule of; Group of answer choices Cash flow statement Balance sheet Income statement Double entry system
Select all that are true with respect to depreciation. Group of answer choices Depreciation is a cash flow outflow at the time it is recorded in the financial statements Depreciation itself is not a cash flow Accounting depreciation impacts cash flow, Tax depreciation does not Accounting depreciation does not impact cash flow, Tax depreciation does impact cash flow The depreciation tax shield is a relevant cash flow for decision making
What are the different types of capital requirements that should be considered while estimating the total capital requirement of an enterprise? Prepare an estimate (in tabular form) of the total capital requirement for a business of your choice.
Assume an income statement with the following classifications: RevenuesCost of goods soldDistribution expensesGeneral & administrative expensesOther revenues and expensesIncome tax on income from continuing operationsGain from disposal of discontinued operationsIncome tax on gain from discontinued operationsNone of the above Indicate by letter how each of the following should be classified: Advertising expense Amortization of a patent held as an investment Cash dividend received on short-term investment Depreciation on plant that manufactures good for sale (prior to sale of the goods) Freight on sales Income tax effect of loss on sale of plant Income tax on gain on sale of short-term investment in securities Interest expense Interest revenue Loss on sale of patent Dividend revenue from investment Salary of company president Sales Sales returns Services sold
How is net operating profit after tax (NOPAT) different from cash flows provided by (and to) operating activities (CFO)?
Please answer Part B and C. The following are answers from previous questions in case you need the below information. Operating Cash Flow: Operating Cash Flow (OCF)= Net Income + Depreciation – Increase in Working Capital. OCF=419,573+11,751-110,249= 321,075 Net Capital Spending: Net capital expenditures (NCE) = Fixed asset (current period) - Fixed asset (prior period) + depreciation (current period) NCE=258,251-261,779+11,751 =8,223 iii. Change in Net Working Capital Net Working Capital (NWC)= Current assets- current Liabilities Year 2019 : NWC =421,609-148,087 =273,522 Year 2020 : NMW= 550,572-166,801 =383,771 Change in Net Working Capital = 383,771-273,522=110,249 Sl.NO PARTICULARS AMOUNT EBIT + DEPRECIATION - TAXES = 597976+11751-178055= $ 431,672 ii] NET CAPITAL SPENDING: ENDING NET FIXED ASSETS - BEGINNING NET FIXED ASSETS + DEPRECIATION = 258251-261779+11751= $ 8223 iii] CHANGE IN NET WORKING…
While calculating operating profit which will be added to net profit a. Profit on Sale of Asset b. Increase in General Reserves c. Interest received d. Refund of Tax
If all values carry a + sign, cash flow before taxes is represented by the following equation:a. gross income - expenses - depreciation - initial investment + salvage valueb. gross income - expenses - depreciation + salvage valuec. gross income - expenses - initial investment + salvage valued. gross income - expenses + initial investment + salvage value

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