WGU C214 | OA
OBJECTIVE ASSESSMENT - EXAM
Financial Management
Retake Exam
WGU C214 | OA Complete
100 100% 2026/2027
QUESTIONS VERIFIED ANSWERS EDITION
TOPICS COVERED
Financial Statement Analysis & Ratios Cost of Capital & Capital Structure
Time Value of Money & Valuation Working Capital Management & Risk
Capital Budgeting & Investment Decisions
COVER PAGE - 1
,SECTION 1 | Financial Statement Analysis & Ratios | Q1-Q25 | WGU C214 Financial Management Retake Exam 2026/2027
Q1 Question 1 of 100
Meridian Manufacturing reported net sales of $4,200,000 in 2025 and $3,500,000 in 2024. The CFO is preparing
a trend analysis for the board presentation and needs to express the 2025 net sales as a percentage change
from 2024. The correct horizontal analysis calculation shows a change of approximately:
A. 20.0% increase, calculated as ($4,200,000 - $3,500,000) / $3,500,000
B. 16.7% increase, calculated as ($4,200,000 - $3,500,000) / $4,200,000
C. 83.3% of prior year, calculated as $3,500,000 / $4,200,000
D. 120.0% of prior year, calculated as $4,200,000 / $3,500,000
Correct Answer: A
Rationale:
Horizontal analysis computes the percentage change by dividing the difference by the base-year amount, yielding
($4,200,000 - $3,500,000) / $3,500,000 = 20.0%. Option B incorrectly divides by the current year rather than the base year,
which understates the change.
Q2 Question 2 of 100
Greenfield Agritech's income statement shows cost of goods sold of $1,800,000 and net sales of $6,000,000 for
fiscal year 2025. The controller is constructing a common-size income statement to benchmark against industry
peers. On the common-size statement, COGS would appear as:
A. 30.0%, because common-size statements express each line item as a percentage of net income
B. 30.0%, because common-size income statements express each line item as a percentage of net sales
C. 33.3%, because common-size statements express each line item as a percentage of total assets
D. 300.0%, because common-size statements express each line item as a ratio to equity
Correct Answer: B
Rationale:
A common-size income statement expresses every line item as a percentage of net sales, so $1,800,000 / $6,000,000 =
30.0%. Option A incorrectly uses net income as the base, and option C confuses the income statement base with the
balance sheet base (total assets).
WGU C214 Financial Management Retake Exam - 2026/2027 | Passing Score: 70% | Page 2 of 48
,Q3 Question 3 of 100
Cascade Home Builders has current assets of $820,000 and current liabilities of $410,000 at year-end 2025.
The company's treasurer wants to assess whether the firm can meet short-term obligations using its current
ratio. If Cascade pays $60,000 in accounts payable from cash, the current ratio will:
A. decrease because paying cash reduces both current assets and current liabilities equally
B. remain unchanged because the reduction in assets is offset by the reduction in liabilities
C. increase because the current ratio exceeds 1.0 before the payment, so equal reductions in numerator and
denominator raise the ratio
D. increase because paying accounts payable always improves the current ratio regardless of the starting ratio
Correct Answer: C
Rationale:
When the current ratio is above 1.0, equal decreases in both current assets and current liabilities raise the ratio
($820,000/$410,000 = 2.0; then $760,000/$350,000 = 2.17). Option A is wrong because equal reductions do not have an
equal proportional effect when the ratio is not exactly 1.0, and option D is incorrect because the effect depends on whether
the initial ratio is above or below 1.0.
Q4 Question 4 of 100
Pinnacle Electronics has cash of $150,000, marketable securities of $80,000, accounts receivable of $270,000,
inventory of $400,000, and current liabilities of $500,000. The CFO needs to compute the quick ratio to evaluate
the firm's immediate liquidity position. The quick ratio is:
A. 1.80, calculated by dividing total current assets by current liabilities
B. 1.60, calculated by subtracting inventory from current assets and dividing by current liabilities
C. 1.00, calculated by dividing only cash and marketable securities by current liabilities
D. 1.00, calculated by dividing cash, marketable securities, and accounts receivable by current liabilities
Correct Answer: D
Rationale:
The quick ratio includes cash, marketable securities, and accounts receivable divided by current liabilities: ($150,000 +
$80,000 + $270,000) / $500,000 = 1.00. Option B yields the same 1.00 here but describes the acid-test method that
excludes inventory from current assets; however, option D precisely names the three quick assets, and option A includes
inventory which is excluded from the quick ratio.
WGU C214 Financial Management Retake Exam - 2026/2027 | Passing Score: 70% | Page 3 of 48
, Q5 Question 5 of 100
Harborview Logistics holds cash of $95,000, marketable securities of $55,000, and current liabilities of
$300,000. The internal audit team is evaluating the firm's most conservative liquidity measure. The cash ratio for
Harborview is:
A. 0.50, computed as ($95,000 + $55,000) / $300,000
B. 0.32, computed as $95,000 / $300,000
C. 0.83, computed as ($95,000 + $55,000 + $100,000 receivables) / $300,000
D. 1.50, computed as ($95,000 + $55,000) / $100,000
Correct Answer: A
Rationale:
The cash ratio includes only cash and marketable securities divided by current liabilities: ($95,000 + $55,000) / $300,000 =
0.50. Option B excludes marketable securities, which should be included, and option C adds receivables, which are not part
of the cash ratio.
Q6 Question 6 of 100
Redwood Timber Company has total debt of $3,600,000 and total equity of $2,400,000 on its 2025 balance
sheet. A credit analyst at the firm's bank is evaluating the company's leverage and needs to calculate the
debt-to-equity ratio. This ratio equals:
A. 0.67, computed as total equity divided by total debt
B. 1.50, computed as total debt divided by total equity
C. 1.50, computed as total debt divided by total assets
D. 0.60, computed as total debt divided by total assets
Correct Answer: B
Rationale:
The debt-to-equity ratio is total debt divided by total equity: $3,600,000 / $2,400,000 = 1.50. Option A inverts the formula
(equity/debt), and option C confuses the debt-to-equity ratio with the debt ratio (debt/assets = 0.60).
Q7 Question 7 of 100
Sterling Aerospace reports total assets of $14,000,000 and total liabilities of $8,400,000 at the end of fiscal year
2025. The CFO is comparing Sterling's debt ratio to the industry average of 55%. Sterling's debt ratio is:
A. 66.7%, computed as total assets divided by total liabilities
B. 40.0%, computed as total equity divided by total assets
C. 60.0%, computed as total liabilities divided by total assets
D. 1.50, computed as total liabilities divided by total equity
Correct Answer: C
Rationale:
The debt ratio equals total liabilities divided by total assets: $8,400,000 / $14,000,000 = 60.0%. Option A inverts the ratio,
option B computes the equity ratio instead, and option D computes the debt-to-equity ratio rather than the debt ratio.
WGU C214 Financial Management Retake Exam - 2026/2027 | Passing Score: 70% | Page 4 of 48
OBJECTIVE ASSESSMENT - EXAM
Financial Management
Retake Exam
WGU C214 | OA Complete
100 100% 2026/2027
QUESTIONS VERIFIED ANSWERS EDITION
TOPICS COVERED
Financial Statement Analysis & Ratios Cost of Capital & Capital Structure
Time Value of Money & Valuation Working Capital Management & Risk
Capital Budgeting & Investment Decisions
COVER PAGE - 1
,SECTION 1 | Financial Statement Analysis & Ratios | Q1-Q25 | WGU C214 Financial Management Retake Exam 2026/2027
Q1 Question 1 of 100
Meridian Manufacturing reported net sales of $4,200,000 in 2025 and $3,500,000 in 2024. The CFO is preparing
a trend analysis for the board presentation and needs to express the 2025 net sales as a percentage change
from 2024. The correct horizontal analysis calculation shows a change of approximately:
A. 20.0% increase, calculated as ($4,200,000 - $3,500,000) / $3,500,000
B. 16.7% increase, calculated as ($4,200,000 - $3,500,000) / $4,200,000
C. 83.3% of prior year, calculated as $3,500,000 / $4,200,000
D. 120.0% of prior year, calculated as $4,200,000 / $3,500,000
Correct Answer: A
Rationale:
Horizontal analysis computes the percentage change by dividing the difference by the base-year amount, yielding
($4,200,000 - $3,500,000) / $3,500,000 = 20.0%. Option B incorrectly divides by the current year rather than the base year,
which understates the change.
Q2 Question 2 of 100
Greenfield Agritech's income statement shows cost of goods sold of $1,800,000 and net sales of $6,000,000 for
fiscal year 2025. The controller is constructing a common-size income statement to benchmark against industry
peers. On the common-size statement, COGS would appear as:
A. 30.0%, because common-size statements express each line item as a percentage of net income
B. 30.0%, because common-size income statements express each line item as a percentage of net sales
C. 33.3%, because common-size statements express each line item as a percentage of total assets
D. 300.0%, because common-size statements express each line item as a ratio to equity
Correct Answer: B
Rationale:
A common-size income statement expresses every line item as a percentage of net sales, so $1,800,000 / $6,000,000 =
30.0%. Option A incorrectly uses net income as the base, and option C confuses the income statement base with the
balance sheet base (total assets).
WGU C214 Financial Management Retake Exam - 2026/2027 | Passing Score: 70% | Page 2 of 48
,Q3 Question 3 of 100
Cascade Home Builders has current assets of $820,000 and current liabilities of $410,000 at year-end 2025.
The company's treasurer wants to assess whether the firm can meet short-term obligations using its current
ratio. If Cascade pays $60,000 in accounts payable from cash, the current ratio will:
A. decrease because paying cash reduces both current assets and current liabilities equally
B. remain unchanged because the reduction in assets is offset by the reduction in liabilities
C. increase because the current ratio exceeds 1.0 before the payment, so equal reductions in numerator and
denominator raise the ratio
D. increase because paying accounts payable always improves the current ratio regardless of the starting ratio
Correct Answer: C
Rationale:
When the current ratio is above 1.0, equal decreases in both current assets and current liabilities raise the ratio
($820,000/$410,000 = 2.0; then $760,000/$350,000 = 2.17). Option A is wrong because equal reductions do not have an
equal proportional effect when the ratio is not exactly 1.0, and option D is incorrect because the effect depends on whether
the initial ratio is above or below 1.0.
Q4 Question 4 of 100
Pinnacle Electronics has cash of $150,000, marketable securities of $80,000, accounts receivable of $270,000,
inventory of $400,000, and current liabilities of $500,000. The CFO needs to compute the quick ratio to evaluate
the firm's immediate liquidity position. The quick ratio is:
A. 1.80, calculated by dividing total current assets by current liabilities
B. 1.60, calculated by subtracting inventory from current assets and dividing by current liabilities
C. 1.00, calculated by dividing only cash and marketable securities by current liabilities
D. 1.00, calculated by dividing cash, marketable securities, and accounts receivable by current liabilities
Correct Answer: D
Rationale:
The quick ratio includes cash, marketable securities, and accounts receivable divided by current liabilities: ($150,000 +
$80,000 + $270,000) / $500,000 = 1.00. Option B yields the same 1.00 here but describes the acid-test method that
excludes inventory from current assets; however, option D precisely names the three quick assets, and option A includes
inventory which is excluded from the quick ratio.
WGU C214 Financial Management Retake Exam - 2026/2027 | Passing Score: 70% | Page 3 of 48
, Q5 Question 5 of 100
Harborview Logistics holds cash of $95,000, marketable securities of $55,000, and current liabilities of
$300,000. The internal audit team is evaluating the firm's most conservative liquidity measure. The cash ratio for
Harborview is:
A. 0.50, computed as ($95,000 + $55,000) / $300,000
B. 0.32, computed as $95,000 / $300,000
C. 0.83, computed as ($95,000 + $55,000 + $100,000 receivables) / $300,000
D. 1.50, computed as ($95,000 + $55,000) / $100,000
Correct Answer: A
Rationale:
The cash ratio includes only cash and marketable securities divided by current liabilities: ($95,000 + $55,000) / $300,000 =
0.50. Option B excludes marketable securities, which should be included, and option C adds receivables, which are not part
of the cash ratio.
Q6 Question 6 of 100
Redwood Timber Company has total debt of $3,600,000 and total equity of $2,400,000 on its 2025 balance
sheet. A credit analyst at the firm's bank is evaluating the company's leverage and needs to calculate the
debt-to-equity ratio. This ratio equals:
A. 0.67, computed as total equity divided by total debt
B. 1.50, computed as total debt divided by total equity
C. 1.50, computed as total debt divided by total assets
D. 0.60, computed as total debt divided by total assets
Correct Answer: B
Rationale:
The debt-to-equity ratio is total debt divided by total equity: $3,600,000 / $2,400,000 = 1.50. Option A inverts the formula
(equity/debt), and option C confuses the debt-to-equity ratio with the debt ratio (debt/assets = 0.60).
Q7 Question 7 of 100
Sterling Aerospace reports total assets of $14,000,000 and total liabilities of $8,400,000 at the end of fiscal year
2025. The CFO is comparing Sterling's debt ratio to the industry average of 55%. Sterling's debt ratio is:
A. 66.7%, computed as total assets divided by total liabilities
B. 40.0%, computed as total equity divided by total assets
C. 60.0%, computed as total liabilities divided by total assets
D. 1.50, computed as total liabilities divided by total equity
Correct Answer: C
Rationale:
The debt ratio equals total liabilities divided by total assets: $8,400,000 / $14,000,000 = 60.0%. Option A inverts the ratio,
option B computes the equity ratio instead, and option D computes the debt-to-equity ratio rather than the debt ratio.
WGU C214 Financial Management Retake Exam - 2026/2027 | Passing Score: 70% | Page 4 of 48
