WGU D076 Finance Skills for Managers 2026 Budgeting, Financial Ratios &
Decision-Making Review
Part 1: Financial Forecasting & Budgeting (Questions 1-35)
Question 1: What is the primary question that both individuals and companies
must consider when making financial decisions?
A) How quickly can the action be completed?
B) Will the benefits of the action outweigh the costs?
C) Is the action legal according to federal statutes?
D) What will competitors think of the decision?
Answer: B) Will the benefits of the action outweigh the costs?
Rationale: The core principle of finance is cost-benefit analysis. Every financial
decision, whether personal or corporate, should only be taken if the expected
benefits exceed the associated costs. This is the fundamental question that drives
all financial decision-making .
Question 2: Hannah is the financial manager of a firm. A project she
recommended has been approved and will cost $5 million. Since the company
,doesn't have enough cash on reserve, Hannah must figure out how to raise
enough money to start the project. She can choose whether to issue new bonds,
new stocks, a mortgage loan, or a combination. What task is Hannah performing?
A) Making an investment decision
B) Making a financing decision
C) Managing working capital
D) Capital budgeting analysis
Answer: B) Making a financing decision
Rationale: Since the project has already been approved for investment, Hannah is
now trying to find a way to finance the investment and is considering the firm's
capital structure. Financing decisions focus on the "right-hand side" of the balance
sheet—determining the mix of debt (bonds) and equity (stocks) used to fund the
firm's assets and operations .
Question 3: The amount of financing a firm needs to fund projected sales when
total projected liabilities and owners' equity exceed total projected assets is
called:
,A) Spontaneous financing
B) Discretionary financing needed (DFN)
C) Equity financing
D) Retained earnings
Answer: B) Discretionary financing needed (DFN)
Rationale: DFN represents the additional funds management must obtain when
there is a discrepancy between projected assets and liabilities. It is a key concept
in financial forecasting used to determine how much external financing a firm will
require to support its projected growth .
Question 4: What is the difference between tracking and monitoring cash flows?
A) Tracking focuses on the future, while monitoring focuses on the past
B) Monitoring involves evaluating cash flows against targets, while tracking
involves ongoing awareness
C) Tracking involves evaluating cash flows against targets, while monitoring
involves ongoing awareness
D) There is no difference; the terms are interchangeable
, Answer: C) Tracking involves evaluating cash flows against targets, while
monitoring involves ongoing awareness
Rationale: Tracking focuses on evaluating cash flows against targets and
identifying patterns, while monitoring involves using cash flow records and
knowing the remaining budget balance to help reach financial goals .
Question 5: How much room a firm has to grow without additional investment in
fixed assets can be determined by:
A) The debt-to-equity ratio
B) The current ratio
C) Using the ratio of actual sales to percent of capacity
D) The net profit margin
Answer: C) Using the ratio of actual sales to percent of capacity
Rationale: By using the ratio of actual sales to percent of capacity, you can
determine how much sales growth the firm can support without needing to invest
Decision-Making Review
Part 1: Financial Forecasting & Budgeting (Questions 1-35)
Question 1: What is the primary question that both individuals and companies
must consider when making financial decisions?
A) How quickly can the action be completed?
B) Will the benefits of the action outweigh the costs?
C) Is the action legal according to federal statutes?
D) What will competitors think of the decision?
Answer: B) Will the benefits of the action outweigh the costs?
Rationale: The core principle of finance is cost-benefit analysis. Every financial
decision, whether personal or corporate, should only be taken if the expected
benefits exceed the associated costs. This is the fundamental question that drives
all financial decision-making .
Question 2: Hannah is the financial manager of a firm. A project she
recommended has been approved and will cost $5 million. Since the company
,doesn't have enough cash on reserve, Hannah must figure out how to raise
enough money to start the project. She can choose whether to issue new bonds,
new stocks, a mortgage loan, or a combination. What task is Hannah performing?
A) Making an investment decision
B) Making a financing decision
C) Managing working capital
D) Capital budgeting analysis
Answer: B) Making a financing decision
Rationale: Since the project has already been approved for investment, Hannah is
now trying to find a way to finance the investment and is considering the firm's
capital structure. Financing decisions focus on the "right-hand side" of the balance
sheet—determining the mix of debt (bonds) and equity (stocks) used to fund the
firm's assets and operations .
Question 3: The amount of financing a firm needs to fund projected sales when
total projected liabilities and owners' equity exceed total projected assets is
called:
,A) Spontaneous financing
B) Discretionary financing needed (DFN)
C) Equity financing
D) Retained earnings
Answer: B) Discretionary financing needed (DFN)
Rationale: DFN represents the additional funds management must obtain when
there is a discrepancy between projected assets and liabilities. It is a key concept
in financial forecasting used to determine how much external financing a firm will
require to support its projected growth .
Question 4: What is the difference between tracking and monitoring cash flows?
A) Tracking focuses on the future, while monitoring focuses on the past
B) Monitoring involves evaluating cash flows against targets, while tracking
involves ongoing awareness
C) Tracking involves evaluating cash flows against targets, while monitoring
involves ongoing awareness
D) There is no difference; the terms are interchangeable
, Answer: C) Tracking involves evaluating cash flows against targets, while
monitoring involves ongoing awareness
Rationale: Tracking focuses on evaluating cash flows against targets and
identifying patterns, while monitoring involves using cash flow records and
knowing the remaining budget balance to help reach financial goals .
Question 5: How much room a firm has to grow without additional investment in
fixed assets can be determined by:
A) The debt-to-equity ratio
B) The current ratio
C) Using the ratio of actual sales to percent of capacity
D) The net profit margin
Answer: C) Using the ratio of actual sales to percent of capacity
Rationale: By using the ratio of actual sales to percent of capacity, you can
determine how much sales growth the firm can support without needing to invest
