16 Which of the following statements is CORRECT? a. The balance sheet for a given year, say 2018, is designed during that year. b. The b alance sheet for a given year, say 2018, tells us how much to give us an idea of what happened to the firm year. money the company earned during that c. The difference between the total assets reported on the b ls us the current market the stockholders alance sheet and the liabilities reported on this t value of the stockholders' equity, assuming the statements are ce with generally accepted accounting principles (GAAP) d. If a company's statements were prepared in accordance with generally accepted accounting principles (GAAP), ,the market value of the stock equals the book value of the stock as reported on the balance sheet. e. The assets section of a typical industrial company's balance sheet begins with cash, then lists the assets in the order in which they will probably be converted to cash, with the longest lived assets listed last. To estimate the cash flow from operations, depreciation must be added back to net income because it is a non-cash charge that has been deducted from revenue. a. True 17 b. False Analysts who follow Howe Industries recently noted that, relative to the previous year, the company's net cash provided from operations increased, yet cash as reported on the balance sheet decreased. Which of the following factors could explain this situation? 18 a. The company cut its dividend. The company made large investments in fixed assets. c. The company sold a division and received cash in return d. The company issued new common stock. e. The company issued new long-term debt. b. In general, if investors regard a company as being relatively risky and/or having relatively poor growth prospects, then it will have relatively high P/E and M/B ratios. a. True 19 If a firm sold some inventory for cash and left the funds in its bank account, its current ratio would probably not change much, but its quick ratio would decline a. True b. False 20 b. False