Rio Imports
Information from the Financial Statements Is Provided in the Following

question 66

Multiple Choice

Rio Imports
Information from the financial statements is provided in the following table:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\\text { Current liabilities } & \$ 460,000 & \$ 320,000 \\\text { Long-term liabilities } & 240,000 & 640,000 \\\text { Shareholders' equity } & 840,000 & 1,080,000 \\\text { Net cash flows from operating activities } & 160,000 & 102,000 \\\text { Interest and principal payments } & 24,000 & 16,000 \\\text { Net sales } & 950,000 & 900,000 \\\text { Net income } & 180,000 & 144,000 \\\text { Interest expense } & 17,000 & 23,000 \\\text { Income taxes } & 32,000 & 29,000 \\\text { Dividends paid to common shareholders } & 30,000 & 60,000\end{array}$
-Refer to the figure Rio Imports.Which of the following can be said regarding the company's debt management activities?

• A) The company has a smaller percentage of capital from shareholders at the end of Year 2 than at the end of Year 1.
• B) The company relied more on creditors for financing during Year 2 than during Year 1.
• C) The company improved its debt-to-equity ratio in Year 2 over Year 1.
• D) The company is in a weaker position at the end of Year 2 to finance capital expenditures from cash flow generated by operating activities.

Comprehend the three types of justice influencing employee reactions to layoffs.

Examine the role of effective human resource management during mergers and acquisitions.

Understand the basic principles and goals of different therapeutic models.

Identify the significance of transference, resistance, and free association in psychodynamic therapy.

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Definitions:

Net Advantage To Leasing

The total financial benefit that a company gains from leasing an asset rather than purchasing it, taking into account all costs and savings associated with the lease.

Straight-Line Depreciation

A method of allocating an asset's cost evenly across its useful life, assuming a constant rate of depreciation.

Marginal Tax Rates

The tax rate applicable to the last dollar of an individual's or entity's taxable income.

Pre-Tax Loan Rate

The interest rate on a loan calculated before taxes have been deducted.