WGU C214 OA FINANCIAL MANAGEMENT EXAM
QUESTIONS WITH COMPLETE SOLUTIONS
2025/2026
If a product is made 100% domestically, what can affect its domestic
market? - ANSWER -
>International competition
If a company makes its product in a foreign country where labor costs
are much lower, what happens? - ANSWER ->Profits go up and
domestic employment decreases.
If the value of a dollar increases, the price of
imports: - ANSWER ->Decreases
Why would a farmer buy a hedge when he signs a contract to sell
produce overseas? - ANSWER ->To reduce currency risk
A basic equation for the balance sheet is: - ANSWER
->Equity = Assets - Liabilities
Why is the Balance Sheet known as a permanent statement? - ANSWER
->Because the other
statements are reset at the end of the fiscal year
How do you calculate the change in Retained
Earnings? - ANSWER ->Net Income - Dividends
Which of the following is generally true? - ANSWER
,->Operating Income and EBIT are the same
Which components are part of total assets? - ANSWER ->Cash Accounts
Receivable, Inventory,
Long Term Assets
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant &
Equipment
b. Accounts Receivable, Accounts Payable,
Inventory
c.Long Term Debt, Property Plant & Equipment,
Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term
Investments - ANSWER ->Inventory, Cash, Accounts
Receivable, Short Term Investments
Suppose the inventory turnover of a company is higher than the
industry. Based on this observation, which of the following is most
likely? - ANSWER >The firm has too little inventory resulting in lost sales
or stock-outs.
If a company wishes to obtain a bank loan, will it want to have a higher
current ratio or a lower current ratio? - ANSWER ->higher
If an investor knows the idiosyncratic risk, the
investor knows the: - ANSWER ->Beta Coefficient
Why would we reject a project based on the NPV? - ANSWER ->the NPV
is a negative number
, Why would we reject a project based on the IRR? -
ANSWER ->the discount rate is higher than the IRR
Company A wishes to keep 20% of its assets as cash.
Company B keeps its cash balance at 5% of assets. Which of the
following statements apply? - ANSWER ->company B invest in more
working current assets
Company A offers trade credit of 2% 10 / net 30 and Company B offers
trade credit at net 30. What can be said about the credit policies of
each company? - ANSWER ->company A can attract more customers
Which of the following characterizes collection float - ANSWER -
>increased float indicates slower processing time
Company A's inventory is larger than Company B. Both companies are
competitors and are about the same size. What does this difference
mean from a working capital management standpoint? - ANSWER -
>company B might have higher inventory turnover
In regards to Accounts Payable balances, which of the following is true:
- ANSWER ->paying off Accounts Payable on the last day due is good
policy If two companies have earnings of $2,000,000, and Company X
has a multiple of 1.2 and Company Z has a multiple of 2.0, what can we
estimate about the value of each company? - ANSWER ->the value of
company Z id higher
Dodd-Frank regulates which segment of the U.S.
Economy? - ANSWER ->banking industry
QUESTIONS WITH COMPLETE SOLUTIONS
2025/2026
If a product is made 100% domestically, what can affect its domestic
market? - ANSWER -
>International competition
If a company makes its product in a foreign country where labor costs
are much lower, what happens? - ANSWER ->Profits go up and
domestic employment decreases.
If the value of a dollar increases, the price of
imports: - ANSWER ->Decreases
Why would a farmer buy a hedge when he signs a contract to sell
produce overseas? - ANSWER ->To reduce currency risk
A basic equation for the balance sheet is: - ANSWER
->Equity = Assets - Liabilities
Why is the Balance Sheet known as a permanent statement? - ANSWER
->Because the other
statements are reset at the end of the fiscal year
How do you calculate the change in Retained
Earnings? - ANSWER ->Net Income - Dividends
Which of the following is generally true? - ANSWER
,->Operating Income and EBIT are the same
Which components are part of total assets? - ANSWER ->Cash Accounts
Receivable, Inventory,
Long Term Assets
Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant &
Equipment
b. Accounts Receivable, Accounts Payable,
Inventory
c.Long Term Debt, Property Plant & Equipment,
Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term
Investments - ANSWER ->Inventory, Cash, Accounts
Receivable, Short Term Investments
Suppose the inventory turnover of a company is higher than the
industry. Based on this observation, which of the following is most
likely? - ANSWER >The firm has too little inventory resulting in lost sales
or stock-outs.
If a company wishes to obtain a bank loan, will it want to have a higher
current ratio or a lower current ratio? - ANSWER ->higher
If an investor knows the idiosyncratic risk, the
investor knows the: - ANSWER ->Beta Coefficient
Why would we reject a project based on the NPV? - ANSWER ->the NPV
is a negative number
, Why would we reject a project based on the IRR? -
ANSWER ->the discount rate is higher than the IRR
Company A wishes to keep 20% of its assets as cash.
Company B keeps its cash balance at 5% of assets. Which of the
following statements apply? - ANSWER ->company B invest in more
working current assets
Company A offers trade credit of 2% 10 / net 30 and Company B offers
trade credit at net 30. What can be said about the credit policies of
each company? - ANSWER ->company A can attract more customers
Which of the following characterizes collection float - ANSWER -
>increased float indicates slower processing time
Company A's inventory is larger than Company B. Both companies are
competitors and are about the same size. What does this difference
mean from a working capital management standpoint? - ANSWER -
>company B might have higher inventory turnover
In regards to Accounts Payable balances, which of the following is true:
- ANSWER ->paying off Accounts Payable on the last day due is good
policy If two companies have earnings of $2,000,000, and Company X
has a multiple of 1.2 and Company Z has a multiple of 2.0, what can we
estimate about the value of each company? - ANSWER ->the value of
company Z id higher
Dodd-Frank regulates which segment of the U.S.
Economy? - ANSWER ->banking industry
