A Security Analyst Obtained the Following Information from Prestopino Products

question 10

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.

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Definitions:

Tax Revenue

The financial earnings governments receive through taxing.

Income Inequality

The unequal distribution of an economy’s total income among households or families.

Minimum Standard

A predefined level of quality, performance, or capability that products, services, or processes must meet or exceed, often set by regulatory bodies.

Marginal Tax Rate

The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify, essentially the tax rate on your last dollar of income.