WGU D366 STUDY SECTION 1 EXAM 69 QUESTIONS
WITH VERIFIED ANSWERS 2025/2026
Step 6: Value the firm
During this step, the value of the firm is determined, often along with its intrinsic
value. This includes the intrinsic value and the selling prices for existing assets of
the firm at a given time. - CORRECT ANSWER A firm is using estimates of what its
share value is in order to make decisions about whether to buy, sell, or hold onto
its equity securities.
Which state of financial statement analysis is the firm involved in?
Step 5: Preparing forecasted financial statements - CORRECT ANSWER As part of
its financial statement analysis, a company is estimating what its likely future
profitability, growth, and risk will be, and, in turn, the likely future returns from
investing in the company.
Which step of financial statement analysis is the firm involved in?
Step 2: Identifying the strategies the firm will use to gain and keep a competitive
advantage
Step 2 involves asking questions about the business model, current competitive
advantages, sustainability of that advantage, and if products are meeting needs. -
CORRECT ANSWER As part of its financial statement analysis, a company is
evaluating the business model the firm is executing to be different and successful
in its industry.
Which step of financial statement analysis is the firm involved in?
, Step 4: Using financial statements to analyze current profitability, growth, and risk
Step 4 asks about the rate of return from assets, rate of return for common equity
shareholders, and whether profit margin is increasing or decreasing over time. -
CORRECT ANSWER As part of its financial statement analysis, a company is
reviewing whether its profit margin is increasing or decreasing over time.
Which step of financial statement analysis is the firm involved in?
Step 1: Identifying the economic characteristics and competitive dynamics of the
industry in which the firm participates.
Step 1 involves asking about dynamic forces driving competition and how
technological change impacts competitive advantage. - CORRECT ANSWER A
potential investor is identifying whether or not the company belongs to an
industry that includes a large number of firms selling the same product or only a
small number of firms selling unique products.
Which step of financial statement analysis is the potential investor involved in?
Step 3: Obtaining and evaluating the quality of the information available from a
firm's financial statements
Step 3 involves asking questions about nonrecurring gains or losses in earnings, if
the firm is claiming certain assets or liabilities, or if the firm is using certain
accounting methods to make the firm appear more profitable. - CORRECT
ANSWER As part of its financial statement analysis, an auditor is trying to
determine whether its client has selected a specific certain accounting method
simply to make the firm appear more profitable or less risky than economic
conditions otherwise suggest.
Which step of financial statement analysis is the auditor involved in?
WITH VERIFIED ANSWERS 2025/2026
Step 6: Value the firm
During this step, the value of the firm is determined, often along with its intrinsic
value. This includes the intrinsic value and the selling prices for existing assets of
the firm at a given time. - CORRECT ANSWER A firm is using estimates of what its
share value is in order to make decisions about whether to buy, sell, or hold onto
its equity securities.
Which state of financial statement analysis is the firm involved in?
Step 5: Preparing forecasted financial statements - CORRECT ANSWER As part of
its financial statement analysis, a company is estimating what its likely future
profitability, growth, and risk will be, and, in turn, the likely future returns from
investing in the company.
Which step of financial statement analysis is the firm involved in?
Step 2: Identifying the strategies the firm will use to gain and keep a competitive
advantage
Step 2 involves asking questions about the business model, current competitive
advantages, sustainability of that advantage, and if products are meeting needs. -
CORRECT ANSWER As part of its financial statement analysis, a company is
evaluating the business model the firm is executing to be different and successful
in its industry.
Which step of financial statement analysis is the firm involved in?
, Step 4: Using financial statements to analyze current profitability, growth, and risk
Step 4 asks about the rate of return from assets, rate of return for common equity
shareholders, and whether profit margin is increasing or decreasing over time. -
CORRECT ANSWER As part of its financial statement analysis, a company is
reviewing whether its profit margin is increasing or decreasing over time.
Which step of financial statement analysis is the firm involved in?
Step 1: Identifying the economic characteristics and competitive dynamics of the
industry in which the firm participates.
Step 1 involves asking about dynamic forces driving competition and how
technological change impacts competitive advantage. - CORRECT ANSWER A
potential investor is identifying whether or not the company belongs to an
industry that includes a large number of firms selling the same product or only a
small number of firms selling unique products.
Which step of financial statement analysis is the potential investor involved in?
Step 3: Obtaining and evaluating the quality of the information available from a
firm's financial statements
Step 3 involves asking questions about nonrecurring gains or losses in earnings, if
the firm is claiming certain assets or liabilities, or if the firm is using certain
accounting methods to make the firm appear more profitable. - CORRECT
ANSWER As part of its financial statement analysis, an auditor is trying to
determine whether its client has selected a specific certain accounting method
simply to make the firm appear more profitable or less risky than economic
conditions otherwise suggest.
Which step of financial statement analysis is the auditor involved in?
