The Following Information Is Available for Birch Company at December

question 45

Multiple Choice

The following information is available for Birch Company at December 31: $$\begin{array} { | l | r } \hline \text { Money market fund balance } & \$ 2,790 \\\hline \text { Certificate of deposit maturing June 30 of next year } & \$ 10,000 \\\hline \text { Postdated checks from eustomers } & \$ 1,475 \\\hline \text { Cash in bank account } & \$ 21,430 \\\hline \text { NSF checks from eustomers returned by bank } & \$ 650 \\\hline \text { Cash in petty cash fund } & \$ 200 \\\hline \text { Inventory of postage stamps } & \$ 24 \\\hline \begin{array} { l } \text { U.S. Treasury bill purchased on December 15 and maturing on February } \\\text { 28 of following year }\end{array} & \$ 5,000 \\\hline\end{array}$$ Based on this information, Birch Company should report Cash and Cash Equivalents on December 31 of:

• A) $38,770
• B) $29,420
• C) $41,345
• D) $31,345
• E) $39,420

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Definitions:

Expected Growth Rate

The predicted percentage increase in the value of an investment, asset, or economy over a certain period of time.

Required Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Market Capitalization Rate

The expected rate of return on a portfolio consisting of all publicly traded stocks, used as a measure to value a company's stocks based on the market’s expectations of its future earnings.

Earnings Retention Ratio

A financial metric indicating the percentage of a company's net earnings that is not paid out as dividends, but instead retained for reinvestment.