Amortization tends to: A. increase cash flow and decrease income. B. decrease cash flow and increase income. C. affect only cash flow. D. affect only income.

6. ElectroWizard Company produces a popular video game called Destructo, which sells for $32. Last year ElectroWizard sold 50,000 Destructo games, each of which costs $6 to produce. ElectroWizard incurred selling and administrative expenses of $80,000 and amortization expense of $10,000. In addition, ElectroWizard has a $100,000 loan outstanding at 12%. Its tax rate is 40%. There are 100,000 common shares outstanding. Prepare an income statement for ElectroWizard in good form (include EPS).

7. Jane is considering an investment in Fauna Flowers (FF). FF is trading at $33 a share. It the company's current dividend is $1.50 a share, what is FF's dividend yield?

8. Valley Home Improvements (VHI) earned $350,000 after taxes in its most recent fiscal year. If VHI's Board of Directors declared a total of $45,000 in preferred dividends what would be the total amount available to pay common shareholders?

9. Two-by-Four Wood Products (TBF) report net income of $2 per share in its most recent financial statements. If TBF has no preferred shares outstanding and the market price of its stock is $4 what is TBF's P/E ratio?

10. The sale of a firm's preferred shares is a source of funds, whereas the payment of preferred dividends is a use of funds. TRUE/ FALSE

11. Earnings available to common shareholders includes potential dividends to be paid to preferred shareholders. TRUE/ FALSE

12. An increase in inventory represents a source of funds. TRUE/ FALSE

13. A balance sheet represents the assets, liabilities, and shareholders' equity of a company at a given point in time. TRUE/ FALSE

14. Cool Ties and Things (CTT) has Total Shareholder's Equity of $350,000. CTT issued $85,000 in preferred stock two years ago. If CTT has 37,000 shares issued and outstanding what is CTT's book value per share?

15. List the 3 primary sections on the cash flow statement.