WGU D775 Introduction to Business Finance
Newest Questions and Answers (2026/2027) |
Comprehensive Review | A+ Verified
• Accounts Receivable (A/R) Turnover -✓✓A type of liquidity ratio that describes
the number of times a firm's accounts receivable account is paid off. Accounts
Receivable Turnover = Credit Sales ÷ Accounts Receivable.
• Activity Ratios -✓✓A type of financial ratio that evaluates how efficiently a firm
utilizes its assets to generate sales or revenue; also known as efficiency ratios.
• After-tax Cost of Debt -✓✓An adjustment of the before-tax cost of debt that
considers the tax deductions on interest expenses. It reflects the actual cost to a
firm for debt financing after benefiting from tax breaks.
• Agency Costs -✓✓Costs that are incurred by the firm when management and
employees of a company do not act in the best interests of shareholders.
• Agency Problem -✓✓A conflict of interest inherent in relationships where one
party is expected to act in another's best interests, such as between shareholders
and company management.
• Annual Interest Rate -✓✓The annualized cost of borrowing or the yearly interest
rate charged on a loan or credit balance. Also known as annual percentage rate
(APR).
• Annuity -✓✓A financial arrangement in which a series of equal payments is
made or received at regular intervals over a specified period of time.
• Assets -✓✓Resources owned by the company that have economic value.
• Auction Markets -✓✓Financial markets in which buyers and sellers submit
competitive bids and offers, with transactions occurring at prices that match the
highest bid with the lowest offer.
, • Average Collection Period -✓✓A type of liquidity ratio that calculates the
average number of days it takes for a company to collect its receivables. Average
Collection Period = Accounts Receivable ÷ Daily Credit Sales.
• Before-tax Cost of Debt -✓✓The interest rate on loans or bonds. If a bank
provides an interest rate on a small business loan of 9.5%, then 9.5% is the before-
tax cost of debt.
• Balance Sheet -✓✓A financial statement that presents a company's financial
position at a specific point in time.
• Bonds -✓✓Debt securities issued by corporations or governments to raise
capital, where the issuer agrees to pay back the principal along with interest on
specified dates.
• Book Value -✓✓Literal value or face value.
• Business Finance -✓✓The area of the business in which 1) financial measures
are used to help management make decisions (ratio analysis), 2) financial analysts
use mathematical models to select what projects to invest in (capital budgeting),
and 3) financial analysts use the cost of capital to determine whether these projects
should be financed with either debt or equity, and which type of each.
• Capital Appreciation -✓✓When a stock is bought at a lower price than what it is
sold. Subtracting the lower purchase price from the higher sales price is the
appreciation.
• Capital Budgeting -✓✓The process by which businesses evaluate potential
investments to determine if they are worth pursuing. It assesses projected cash
flows, costs, and returns of projects like new machinery or acquisitions to ensure
efficient resource allocation and profitability.
• Capital Structure -✓✓The mixture of debt and equity that a firm uses to finance
the company.
• Cash Ratio -✓✓A type of liquidity ratio that provides insight into a company's
ability to pay off short-term liabilities with its cash on hand. Cash Ratio = Cash ÷
Current Liabilities.
Newest Questions and Answers (2026/2027) |
Comprehensive Review | A+ Verified
• Accounts Receivable (A/R) Turnover -✓✓A type of liquidity ratio that describes
the number of times a firm's accounts receivable account is paid off. Accounts
Receivable Turnover = Credit Sales ÷ Accounts Receivable.
• Activity Ratios -✓✓A type of financial ratio that evaluates how efficiently a firm
utilizes its assets to generate sales or revenue; also known as efficiency ratios.
• After-tax Cost of Debt -✓✓An adjustment of the before-tax cost of debt that
considers the tax deductions on interest expenses. It reflects the actual cost to a
firm for debt financing after benefiting from tax breaks.
• Agency Costs -✓✓Costs that are incurred by the firm when management and
employees of a company do not act in the best interests of shareholders.
• Agency Problem -✓✓A conflict of interest inherent in relationships where one
party is expected to act in another's best interests, such as between shareholders
and company management.
• Annual Interest Rate -✓✓The annualized cost of borrowing or the yearly interest
rate charged on a loan or credit balance. Also known as annual percentage rate
(APR).
• Annuity -✓✓A financial arrangement in which a series of equal payments is
made or received at regular intervals over a specified period of time.
• Assets -✓✓Resources owned by the company that have economic value.
• Auction Markets -✓✓Financial markets in which buyers and sellers submit
competitive bids and offers, with transactions occurring at prices that match the
highest bid with the lowest offer.
, • Average Collection Period -✓✓A type of liquidity ratio that calculates the
average number of days it takes for a company to collect its receivables. Average
Collection Period = Accounts Receivable ÷ Daily Credit Sales.
• Before-tax Cost of Debt -✓✓The interest rate on loans or bonds. If a bank
provides an interest rate on a small business loan of 9.5%, then 9.5% is the before-
tax cost of debt.
• Balance Sheet -✓✓A financial statement that presents a company's financial
position at a specific point in time.
• Bonds -✓✓Debt securities issued by corporations or governments to raise
capital, where the issuer agrees to pay back the principal along with interest on
specified dates.
• Book Value -✓✓Literal value or face value.
• Business Finance -✓✓The area of the business in which 1) financial measures
are used to help management make decisions (ratio analysis), 2) financial analysts
use mathematical models to select what projects to invest in (capital budgeting),
and 3) financial analysts use the cost of capital to determine whether these projects
should be financed with either debt or equity, and which type of each.
• Capital Appreciation -✓✓When a stock is bought at a lower price than what it is
sold. Subtracting the lower purchase price from the higher sales price is the
appreciation.
• Capital Budgeting -✓✓The process by which businesses evaluate potential
investments to determine if they are worth pursuing. It assesses projected cash
flows, costs, and returns of projects like new machinery or acquisitions to ensure
efficient resource allocation and profitability.
• Capital Structure -✓✓The mixture of debt and equity that a firm uses to finance
the company.
• Cash Ratio -✓✓A type of liquidity ratio that provides insight into a company's
ability to pay off short-term liabilities with its cash on hand. Cash Ratio = Cash ÷
Current Liabilities.
