WGU C214 OA Financial Management
Question and Answer | 100% Pass
Guarantee | 2026/2027 Review Bundle
• Statement of Cash Flows -✓✓Shows the change in cash balance for a period of
time. Focuses only on items where cash is received, or cash is paid.
• Cash Flow from Operating Activities (CFO) -✓✓Cash flow that a company
generates as a result of day-to-day business operations. Deals with Current Assets
and Current Liabilities.
• Cash Flow from Investing Activities (CFI) -✓✓Cash flow that is generated from
investments in long term assets.
• Cash Flow from Financing Activities (CFF) -✓✓Cash flow that is used to fund
the company. Cash flow that is generated from financing the business. Includes
Debt & Equity.
• How does an increase in Accounts receivable impact CFO? -✓✓An Increase in
Accounts receivable will decrease CFO
• How does an increase in Accounts payable impact CFO? -✓✓An Increase in
Accounts Payable will increase CFO
• What financial statement is prepared at a point in time -✓✓Balance Sheet
• What financial statements are prepared for a period of time? -✓✓· Income
Statement
· Retained Earnings Statement
· Statement of Cash Flows
• Define Efficient Frontier -✓✓Maximizes expected return for a given level of risk
• Where would a risk averse investor fall on the efficient frontier? -✓✓100%
Bonds
, • Where would a risk-taking investor fall on the efficient frontier? -✓✓100%
Stocks
• What is a Beta? -✓✓A Measure of Risk - A Beta 1 is the average risk of all
stocks. Anytime a beta is below 1, it is less risk. If it is more than 1, it is high risk.
• Define efficient market hypothesis as it relates to a firm? -✓✓For any company
to survive, they need to make profitable decisions. Otherwise, investors will shun
their business. The firm needs to invest where the return is more than the cost.
• What is the intrinsic value of a stock under efficient market hypothesis? -✓✓The
intrinsic value of stock is the present value of the stock's after tax net cash flows.
• Whenever the question states that dividend was paid recently or was just paid,
what must be calculated first? -✓✓Expected Dividend
• For every Bond question, what must be entered? -✓✓FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
• What is Capital Budgeting? -✓✓Refers to long term investment decision making.
Refers to the process used in making investment decisions involving projects that
generate cash flows over a multi-year horizon.
• What information is needed for capital budgeting? -✓✓Initial Outlay
(How much money the company is going to invest in the company right now)
Differential Annual Cash Flows
(Cash flow that the project will generate year after year)
Terminal Cash Flow
(Cash flow generated at the end of the project)
• Define NPV? -✓✓Net Present Value method is the method that is universally
used by companies to evaluate long term investment decisions.
NPV is defined as the present value of after-tax net tax flows and is most common
used method in capital budgeting.
The Net Present value should be positive in order for a company to proceed with
an investment. If it is negative, the company should not proceed.
Question and Answer | 100% Pass
Guarantee | 2026/2027 Review Bundle
• Statement of Cash Flows -✓✓Shows the change in cash balance for a period of
time. Focuses only on items where cash is received, or cash is paid.
• Cash Flow from Operating Activities (CFO) -✓✓Cash flow that a company
generates as a result of day-to-day business operations. Deals with Current Assets
and Current Liabilities.
• Cash Flow from Investing Activities (CFI) -✓✓Cash flow that is generated from
investments in long term assets.
• Cash Flow from Financing Activities (CFF) -✓✓Cash flow that is used to fund
the company. Cash flow that is generated from financing the business. Includes
Debt & Equity.
• How does an increase in Accounts receivable impact CFO? -✓✓An Increase in
Accounts receivable will decrease CFO
• How does an increase in Accounts payable impact CFO? -✓✓An Increase in
Accounts Payable will increase CFO
• What financial statement is prepared at a point in time -✓✓Balance Sheet
• What financial statements are prepared for a period of time? -✓✓· Income
Statement
· Retained Earnings Statement
· Statement of Cash Flows
• Define Efficient Frontier -✓✓Maximizes expected return for a given level of risk
• Where would a risk averse investor fall on the efficient frontier? -✓✓100%
Bonds
, • Where would a risk-taking investor fall on the efficient frontier? -✓✓100%
Stocks
• What is a Beta? -✓✓A Measure of Risk - A Beta 1 is the average risk of all
stocks. Anytime a beta is below 1, it is less risk. If it is more than 1, it is high risk.
• Define efficient market hypothesis as it relates to a firm? -✓✓For any company
to survive, they need to make profitable decisions. Otherwise, investors will shun
their business. The firm needs to invest where the return is more than the cost.
• What is the intrinsic value of a stock under efficient market hypothesis? -✓✓The
intrinsic value of stock is the present value of the stock's after tax net cash flows.
• Whenever the question states that dividend was paid recently or was just paid,
what must be calculated first? -✓✓Expected Dividend
• For every Bond question, what must be entered? -✓✓FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
• What is Capital Budgeting? -✓✓Refers to long term investment decision making.
Refers to the process used in making investment decisions involving projects that
generate cash flows over a multi-year horizon.
• What information is needed for capital budgeting? -✓✓Initial Outlay
(How much money the company is going to invest in the company right now)
Differential Annual Cash Flows
(Cash flow that the project will generate year after year)
Terminal Cash Flow
(Cash flow generated at the end of the project)
• Define NPV? -✓✓Net Present Value method is the method that is universally
used by companies to evaluate long term investment decisions.
NPV is defined as the present value of after-tax net tax flows and is most common
used method in capital budgeting.
The Net Present value should be positive in order for a company to proceed with
an investment. If it is negative, the company should not proceed.
