Exhibit 10 During 2004 Nelson Corp

question 41

Multiple Choice

Exhibit 10.7
Use the Information Below for the Following Problem(S)
You are provided with the following information for the Nelson Corporation.
\begin{array}{lrr}\begin{array}{l}\\\text{Net Income}\\\text{Depreciation}\\\text{Total Current Assets}\\\text{Total Current Liabilities}\\\end{array}\\begin{array}{r}2003 \\\hline \$ 1500 \\\$ \quad 200 \\\$ \quad 700 \\\$ \quad 500\end{array}\\begin{array}{r}\text { 2004 } \\\hline\$2000 \\\$ \quad 475 \\\$ \quad 900 \\\$ \quad 800\end{array}\\end{array}
During 2004 Nelson Corp. made capital expenditures totaling $500 and disposed property worth $800.
-Refer to Exhibit 10.7.The firm's free cash flow is

• A) $2200
• B) $1900
• C) $2875
• D) $2325
• E) $2575

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Definitions:

Overvalued

A term used to describe an asset or security whose price is believed to be higher than its intrinsic value.

Consolidated Balance Sheet

A consolidated financial report that shows the assets, liabilities, and shareholders' equity of a parent company along with its subsidiaries as though they are one entity.

Inventory

The components, items in the process of completion, and completed products which form part of a company's assets that are available or will soon be available for sale.

Fair Value

The estimated price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.