A Security Analyst Obtained the Following Information from Prestopino Products

question 33

Multiple Choice

A security analyst obtained the following information from Prestopino Products' financial statements: •Retained earnings at the end of 2011 were $700,000,but retained earnings at the end of 2012 had declined to $320,000.
•The company does not pay dividends.
•The company's depreciation expense is its only non-cash expense; it has no amortization charges.
•The company has no non-cash revenues.
•The company's net cash flow (NCF) for 2012 was $150,000.
On the basis of this information,which of the following statements is CORRECT?

• A) Prestopino had negative net income in 2012.
• B) Prestopino's depreciation expense in 2012 was less than $150,000.
• C) Prestopino had positive net income in 2012, but its income was less than its 2011 income.
• D) Prestopino's NCF in 2012 must be higher than its NCF in 2011.
• E) Prestopino's cash on the balance sheet at the end of 2012 must be lower than the cash it had on the balance sheet at the end of 2011.

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Definitions:

Rating Scale

A tool used to assign a value to a variable or response, often in the form of numbers or descriptions, to measure attitudes or perceptions.

Self-appraisals

The process in which employees evaluate their own job performance and productivity, often as part of performance management systems.

Administrative Decisions

Decisions related to the management and operations of an organization, often involving organizational policy or resource allocation.

Tell-and-sell Approach

A sales technique that involves informing customers about a product's benefits followed by persuading them to make a purchase.