WGU C214 Financial Mgmt Pass the OA 2026 Actual Questions
and Answers 2026/2027
Which will decrease CFO
An increase in A/R & a decrease in A/P
NOTE:
-when A/R is increased, product has been sold
-when A/P is decreased, suppliers have been paid
These actions decrease CFO
Which represents assets in CFO
A/R and inventory
Depreciation expense is added back in FCF because
Depreciation expense is a non-cash expense
FCFF can sustainably be distributed
To the providers of capital
,A company that increases A/R by $5000 in the recent period
but expects to collect half in the next period, will see the
change in A/R affect cash flows from the operating section as
An inflow of cash
A decrease of cash flows by $5000
NOTE: the $5000 received is an expected inflow of cash;
however receiving $5000 indicates that the firm is down $5000
in inventory which is shown as a decrease
Retained Earnings (RE) are
The earnings plowed back to finance the firm's asset base and
is NOT cash
The evolution of retained earnings is
Retained earnings left over is either retained in the company -
or- paid out in dividends
How do you calculate the change in retained earnings (RE)
RE = Net Income - Dividends
NOTE: this equation can be inverted from formula sheet)
,What is the equation for FCFF
FCFF = EBIT * (1-tax rate) + depreciation - capital expenditures
- increase in net working capital (NWC)
NOTE: this equation can be easily located on the provided
formula sheet
The firm in an industry with the largest CFO is the industry's
top performer
FALSE
NOTE: a positive CFO can still be detrimental to the firm
depending on other factors
As corporate tax rates increase
The firm experiences a higher tax shield from interest
A tax cut
Increases WACC and the rate of return
, The impact of a market rate increase will
Increase a firm's cost of capital
EBIT is called considered
Operating income
Accounting income is
Lower than taxable income
Two examples of accounting estimates used in financial
accounting are
Depreciation and useful life
An accounting difference is
and Answers 2026/2027
Which will decrease CFO
An increase in A/R & a decrease in A/P
NOTE:
-when A/R is increased, product has been sold
-when A/P is decreased, suppliers have been paid
These actions decrease CFO
Which represents assets in CFO
A/R and inventory
Depreciation expense is added back in FCF because
Depreciation expense is a non-cash expense
FCFF can sustainably be distributed
To the providers of capital
,A company that increases A/R by $5000 in the recent period
but expects to collect half in the next period, will see the
change in A/R affect cash flows from the operating section as
An inflow of cash
A decrease of cash flows by $5000
NOTE: the $5000 received is an expected inflow of cash;
however receiving $5000 indicates that the firm is down $5000
in inventory which is shown as a decrease
Retained Earnings (RE) are
The earnings plowed back to finance the firm's asset base and
is NOT cash
The evolution of retained earnings is
Retained earnings left over is either retained in the company -
or- paid out in dividends
How do you calculate the change in retained earnings (RE)
RE = Net Income - Dividends
NOTE: this equation can be inverted from formula sheet)
,What is the equation for FCFF
FCFF = EBIT * (1-tax rate) + depreciation - capital expenditures
- increase in net working capital (NWC)
NOTE: this equation can be easily located on the provided
formula sheet
The firm in an industry with the largest CFO is the industry's
top performer
FALSE
NOTE: a positive CFO can still be detrimental to the firm
depending on other factors
As corporate tax rates increase
The firm experiences a higher tax shield from interest
A tax cut
Increases WACC and the rate of return
, The impact of a market rate increase will
Increase a firm's cost of capital
EBIT is called considered
Operating income
Accounting income is
Lower than taxable income
Two examples of accounting estimates used in financial
accounting are
Depreciation and useful life
An accounting difference is
