WGU D366 PRE ASSESSMENT CONCEPTUAL
PREPARATION FOR OA 90 QUESTIONS WITH
VERIFIED ANSWERS 2025/2026
The financial analyst calculated various short-term liquidity ratios. - CORRECT
ANSWER A financial analyst is required to analyze the financial statements of
Alliah Company. While analyzing, the analyst discovered that the company does
not have adequate current assets to meet its total current liabilities. Thus, the
company might face difficulties in meeting its upcoming payments toward its
current liabilities. Which method did the financial analyst use to make this
analysis?
Percentage change financial statements - CORRECT ANSWER A financial analyst
who was analyzing Company P's financial statements concluded that this year, the
company's revenue increased by 20%, gross income by 16%, and net income by
10%. Last year, the same items increased by 12%, 6%, and 4%, respectively. Which
financial statement analysis tool did the financial analyst use to conclude?
Buyer power - CORRECT ANSWER A company evaluates the industry's economic
conditions using Porter's five forces model. Using the analysis, the company
wishes to identify the vertical competition in the value chain and its impact on its
performance. Which one of Porter's five forces should the company refer to?
A company that sells nondifferentiated products - CORRECT ANSWER A start-up's
chief executive officer (CEO) plans to expand the business by acquisition of a
mature company. The CEO is particularly interested in companies that exhibit
superior sales volume and market share and is willing to accept low profit
,margins. Which company meets the CEO's investment criteria based on the
framework for strategic analysis?
All items are a percentage of total assets. - CORRECT ANSWER Corollary Marketing
has prepared the common-size balance sheet for the current year and has
determined the following percentages:
Cash and equivalents: 15%
Receivables: 20%
Property, plant, and equipment: 12%
Accumulated depreciation: (5%)
Accounts payable: 9%
How does Corollary Marketing calculate these percentages?
Low-cost leadership strategy - CORRECT ANSWER Orange Zest Company
specializes in household goods and appliances. In recent years, the market has
become increasingly competitive with the emergence of new entrants. In light of
this, the business decided to continue selling its nondifferentiated items while
taking a smaller profit margin in exchange for increased market share and sales
volume. Which strategy did the company choose to compete in its industry?
The cost of goods sold as a percentage of sales has increased. - CORRECT ANSWER
A company's financial analyst identified that the cost of goods sold in a common-
size income statement was 18% in the previous year. However, it changed to 21%
in the current year. What does this analysis indicate?
Price-earnings ratio - CORRECT ANSWER A company's financial analyst analyzes
the current year's income statement and balance sheet. The analyst has already
, calculated some of the profitability and risk ratios. The company wants the analyst
to determine what a reasonable price for the company's common shares is. Which
ratio will help the analyst in fulfilling the requirement?
An increase in cost of sales - CORRECT ANSWER A firm's management team is
examining the income statement and is concerned that while revenues are
growing, gross profit is declining. Which financial activity caused the decline?
Investing - CORRECT ANSWER A hardware manufacturing firm has high
expenditures on property, plant, and equipment (PPE). Where in the statement of
cash flows are the net additions reflected?
Because the income is treated as transitory - CORRECT ANSWER A financial analyst
analyzes a company's recently published annual report to estimate the company's
future earnings. While adjusting the company's net income to estimate the
company's future profitability, the company excluded the income on investment
securities deemed available for sale. Why did the analyst exclude the income on
investment securities deemed available for sale?
Spark it enjoys the benefits and takes the economic risks of the receivables. -
CORRECT ANSWER A financial analyst is analyzing Spar kit’s financial statement.
The analyst noticed that the company uses special purpose entities (SPE) to meet
its short-term needs and treats this transaction as a collateralized loan. What
should the analyst consider while analyzing Spar kit’s liabilities?
As these are considered transitory income or loss - CORRECT ANSWER A financial
analyst excluded other comprehensive items reported in the income statement
while estimating the company's future earnings. Why did the analyst exclude this
item from the analysis?
PREPARATION FOR OA 90 QUESTIONS WITH
VERIFIED ANSWERS 2025/2026
The financial analyst calculated various short-term liquidity ratios. - CORRECT
ANSWER A financial analyst is required to analyze the financial statements of
Alliah Company. While analyzing, the analyst discovered that the company does
not have adequate current assets to meet its total current liabilities. Thus, the
company might face difficulties in meeting its upcoming payments toward its
current liabilities. Which method did the financial analyst use to make this
analysis?
Percentage change financial statements - CORRECT ANSWER A financial analyst
who was analyzing Company P's financial statements concluded that this year, the
company's revenue increased by 20%, gross income by 16%, and net income by
10%. Last year, the same items increased by 12%, 6%, and 4%, respectively. Which
financial statement analysis tool did the financial analyst use to conclude?
Buyer power - CORRECT ANSWER A company evaluates the industry's economic
conditions using Porter's five forces model. Using the analysis, the company
wishes to identify the vertical competition in the value chain and its impact on its
performance. Which one of Porter's five forces should the company refer to?
A company that sells nondifferentiated products - CORRECT ANSWER A start-up's
chief executive officer (CEO) plans to expand the business by acquisition of a
mature company. The CEO is particularly interested in companies that exhibit
superior sales volume and market share and is willing to accept low profit
,margins. Which company meets the CEO's investment criteria based on the
framework for strategic analysis?
All items are a percentage of total assets. - CORRECT ANSWER Corollary Marketing
has prepared the common-size balance sheet for the current year and has
determined the following percentages:
Cash and equivalents: 15%
Receivables: 20%
Property, plant, and equipment: 12%
Accumulated depreciation: (5%)
Accounts payable: 9%
How does Corollary Marketing calculate these percentages?
Low-cost leadership strategy - CORRECT ANSWER Orange Zest Company
specializes in household goods and appliances. In recent years, the market has
become increasingly competitive with the emergence of new entrants. In light of
this, the business decided to continue selling its nondifferentiated items while
taking a smaller profit margin in exchange for increased market share and sales
volume. Which strategy did the company choose to compete in its industry?
The cost of goods sold as a percentage of sales has increased. - CORRECT ANSWER
A company's financial analyst identified that the cost of goods sold in a common-
size income statement was 18% in the previous year. However, it changed to 21%
in the current year. What does this analysis indicate?
Price-earnings ratio - CORRECT ANSWER A company's financial analyst analyzes
the current year's income statement and balance sheet. The analyst has already
, calculated some of the profitability and risk ratios. The company wants the analyst
to determine what a reasonable price for the company's common shares is. Which
ratio will help the analyst in fulfilling the requirement?
An increase in cost of sales - CORRECT ANSWER A firm's management team is
examining the income statement and is concerned that while revenues are
growing, gross profit is declining. Which financial activity caused the decline?
Investing - CORRECT ANSWER A hardware manufacturing firm has high
expenditures on property, plant, and equipment (PPE). Where in the statement of
cash flows are the net additions reflected?
Because the income is treated as transitory - CORRECT ANSWER A financial analyst
analyzes a company's recently published annual report to estimate the company's
future earnings. While adjusting the company's net income to estimate the
company's future profitability, the company excluded the income on investment
securities deemed available for sale. Why did the analyst exclude the income on
investment securities deemed available for sale?
Spark it enjoys the benefits and takes the economic risks of the receivables. -
CORRECT ANSWER A financial analyst is analyzing Spar kit’s financial statement.
The analyst noticed that the company uses special purpose entities (SPE) to meet
its short-term needs and treats this transaction as a collateralized loan. What
should the analyst consider while analyzing Spar kit’s liabilities?
As these are considered transitory income or loss - CORRECT ANSWER A financial
analyst excluded other comprehensive items reported in the income statement
while estimating the company's future earnings. Why did the analyst exclude this
item from the analysis?
