2-1 f,g,h,I,j

benetits of tHe s corporations are small businesses that have the limited-liability partnerships or proprietorships. corporate form of organization yet are taxed as percentage paid in taxes. asset is sold for more than its cost, the profit is called a capital gain; if tates, tax rates are progressive-the higher one's income, the larger the al the asset is sold . Assets such as stocks, bonds, and real estate are defined as capital assets. If a capit for a loss, it is called a capital loss. Assets held for more than a year provide long-term gains or losses. . Dividends are taxed as though they were capital gains. . Personal taxes are discussed in more detail in Web Extension 2A. ONS (2-1) Define each of the following terms: a. Annual report; balance sheet; income statement b. Common stockholders' equity, or net worth; retained earnings c. Statement of stockholders' equity; statement of cash flows d. Depreciation; amortization; EBITDA e. Operating current assets; operating current liabilities; net operating working capital; total net operating capital f. Accounting profit; net cash flow; NOPAT; free cash flow; return on invested capital g. Market Value Added; Economic Value Added h. Progressive tax; taxable income; marginal and average tax rates i. Capital gain or loss; tax loss carryback and carryforward j. Improper accumulation; S corporation (2-2) What four statements are contained in most annual reports? 2-3) If a "typical" firm reports $20 million of retained earnings on its balance sheet, can the firm definitely pay a $20 million cash dividend? 2-4) Explain the following statement: "Whereas the balance sheet can be thought of as a snapshot of the firm's financial position at a point in time, the income statement reports on operations over a period of time." 5) What is operating capital, and why is it important? 6) Explain the difference between NOPAT and net income. Which is a better measure of the performance of a company's operations? What is free cash flow? why is it the most imp If you were starting a business, what tax considerations might cause you to prefer to set i up as a proprietorship or a partnership rather than as a corporation? ortant measure of cash flow? ) PROBLEM Solution Shown in Appendix Last year Cole Furnaces had $5 milion in operating income (FRIT Th come (FRIT) The