WGU C214 Financial Management Final EXAM MOST
TESTED QUESTIONS AND VERIFIED SOLUTIONS/GET IT
100% ACCURATE!! 2026!!
Statement of Cash Flows - -------CORRECT ANSWER----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) - -------CORRECT ANSWER----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) - -------CORRECT ANSWER----Cash flow that is generated from
investments in long term assets.
Cash Flow from Financing Activities (CFF) - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----An Increase in
Accounts receivable will decrease CFO
How does an increase in Accounts payable impact CFO? - -------CORRECT ANSWER----An Increase in
Accounts Payable will increase CFO
What financial statement is prepared at a point in time - -------CORRECT ANSWER----Balance Sheet
What financial statements are prepared for a period of time? - -------CORRECT ANSWER----· Income
Statement
· Retained Earnings Statement
· Statement of Cash Flows
, Define Efficient Frontier - -------CORRECT ANSWER----Maximizes expected return for a given level of risk
Where would a risk averse investor fall on the efficient frontier? - -------CORRECT ANSWER----100%
Bonds
Where would a risk-taking investor fall on the efficient frontier? - -------CORRECT ANSWER----100%
Stocks
What is a Beta? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----Expected Dividend
For every Bond question, what must be entered? - -------CORRECT ANSWER----FV must be entered as
1000
PMT must be entered as 1000 x Coupon Rate
What is Capital Budgeting? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----Initial Outlay
(How much money the company is going to invest in the company right now)
Differential Annual Cash Flows
TESTED QUESTIONS AND VERIFIED SOLUTIONS/GET IT
100% ACCURATE!! 2026!!
Statement of Cash Flows - -------CORRECT ANSWER----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) - -------CORRECT ANSWER----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) - -------CORRECT ANSWER----Cash flow that is generated from
investments in long term assets.
Cash Flow from Financing Activities (CFF) - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----An Increase in
Accounts receivable will decrease CFO
How does an increase in Accounts payable impact CFO? - -------CORRECT ANSWER----An Increase in
Accounts Payable will increase CFO
What financial statement is prepared at a point in time - -------CORRECT ANSWER----Balance Sheet
What financial statements are prepared for a period of time? - -------CORRECT ANSWER----· Income
Statement
· Retained Earnings Statement
· Statement of Cash Flows
, Define Efficient Frontier - -------CORRECT ANSWER----Maximizes expected return for a given level of risk
Where would a risk averse investor fall on the efficient frontier? - -------CORRECT ANSWER----100%
Bonds
Where would a risk-taking investor fall on the efficient frontier? - -------CORRECT ANSWER----100%
Stocks
What is a Beta? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----Expected Dividend
For every Bond question, what must be entered? - -------CORRECT ANSWER----FV must be entered as
1000
PMT must be entered as 1000 x Coupon Rate
What is Capital Budgeting? - -------CORRECT ANSWER----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? - -------CORRECT ANSWER----Initial Outlay
(How much money the company is going to invest in the company right now)
Differential Annual Cash Flows
