WGU Finance Exam with Questions and Answers

WGU Finance Exam with Questions and Answers The firm Betsy's Books conducts a financial analysis using ratios to know how it is performing in comparison to other similar firms. What is this process called? a. Maximization b. Benchmarking c. Equity valuation d. Auditing ANSWER b What type of ratio is used to assess a firm's ability to meet short-term obligations without raising external capital? a. Profitability ratios b. Activity ratios c. Market ratios d. Liquidity ratios ANSWER d Why are several different types of ratios used to analyze a firm? a. Because other ratios must be calculated before the main ratio can be calculated b. Because certain types of ratios become obsolete as a firm innovates c. Because ratios are sometimes inaccurate, and firms have a greater chance of calculating an accurate ratio if they calculate multiple ratios d. Because different types of ratios are needed to get information about different parts of a firm ANSWER d