WGU C214 Financial Management Practice Test 50 Questions |
Accurate & Verified Answers to Pass Actual Exam
1. What is the primary goal of financial management in a corporation?
A. Maximize shareholder wealth
B. Maximize market share
C. Maximize net income
D. Minimize operating expenses
Answer: A
Explanation: The primary goal of financial management is to maximize the market value of
the existing stock, which corresponds to maximizing shareholder wealth.
2. In which market are existing securities traded among investors?
A. Primary market
B. Secondary market
C. Initial Public Offering market
D. Money market
Answer: B
Explanation: The secondary market is where investors trade previously issued securities
among themselves.
,3. Which financial statement provides a ‘snapshot’ of a firm’s financial position
at a specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
Explanation: The balance sheet reports the assets, liabilities, and equity of a firm at a
specific date.
4. How is the Current Ratio calculated?
A. Current Assets minus Current Liabilities
B. Current Assets divided by Total Assets
C. Current Assets divided by Current Liabilities
D. Quick Assets divided by Current Liabilities
Answer: C
Explanation: The current ratio is a liquidity ratio calculated as current assets divided by
current liabilities.
5. What does the Quick Ratio exclude from Current Assets?
A. Cash
B. Accounts Receivable
, C. Marketable Securities
D. Inventory
Answer: D
Explanation: The quick ratio (acid-test) excludes inventory because it is the least liquid
current asset.
6. The Inventory Turnover ratio is a measure of:
A. Liquidity
B. Asset Management efficiency
C. Profitability
D. Market value
Answer: B
Explanation: Inventory turnover measures how many times a company has sold and
replaced its inventory during a specific period.
7. What is the impact of an increase in interest rates on the price of existing
bonds?
A. Bond prices decrease
B. Bond prices increase
C. Bond prices remain unchanged
D. Bond prices become more volatile
Answer: A
Accurate & Verified Answers to Pass Actual Exam
1. What is the primary goal of financial management in a corporation?
A. Maximize shareholder wealth
B. Maximize market share
C. Maximize net income
D. Minimize operating expenses
Answer: A
Explanation: The primary goal of financial management is to maximize the market value of
the existing stock, which corresponds to maximizing shareholder wealth.
2. In which market are existing securities traded among investors?
A. Primary market
B. Secondary market
C. Initial Public Offering market
D. Money market
Answer: B
Explanation: The secondary market is where investors trade previously issued securities
among themselves.
,3. Which financial statement provides a ‘snapshot’ of a firm’s financial position
at a specific point in time?
A. Income Statement
B. Statement of Cash Flows
C. Balance Sheet
D. Statement of Retained Earnings
Answer: C
Explanation: The balance sheet reports the assets, liabilities, and equity of a firm at a
specific date.
4. How is the Current Ratio calculated?
A. Current Assets minus Current Liabilities
B. Current Assets divided by Total Assets
C. Current Assets divided by Current Liabilities
D. Quick Assets divided by Current Liabilities
Answer: C
Explanation: The current ratio is a liquidity ratio calculated as current assets divided by
current liabilities.
5. What does the Quick Ratio exclude from Current Assets?
A. Cash
B. Accounts Receivable
, C. Marketable Securities
D. Inventory
Answer: D
Explanation: The quick ratio (acid-test) excludes inventory because it is the least liquid
current asset.
6. The Inventory Turnover ratio is a measure of:
A. Liquidity
B. Asset Management efficiency
C. Profitability
D. Market value
Answer: B
Explanation: Inventory turnover measures how many times a company has sold and
replaced its inventory during a specific period.
7. What is the impact of an increase in interest rates on the price of existing
bonds?
A. Bond prices decrease
B. Bond prices increase
C. Bond prices remain unchanged
D. Bond prices become more volatile
Answer: A
