WESTERN GOVERNORS UNIVERSITY
C214 FINANCIAL MANAGEMENT
CONCEPTS ONLY MULTI CHOICE
VERSION | COMPREHENSIVE OA EXAM
PREP 2026 | GRADED A+ |
GUARANTEED SUCCESS
Updated 2026 Questions and Answers | 100% Verified
Exam Prep and Comprehensive Rationales Included
,A basic equation for the balance sheet is: a
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
Why is the Balance Sheet known as a permanent b
statement?
a. Because the statement is sent to the SEC.
b. Because the other statements are reset at the end of
the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders.
How do you calculate the change in Retained Earnings? d
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends
Which of the following is generally true? c
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net
Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income
Which components are part of total assets? b
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term
Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity
Which components are part of current assets? d
a. Cash, Accounts Receivable, Property Plant &
Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common
Stock
d. Inventory, Cash, Accounts Receivable, Short Term
Investments
Which components are part of Total Liabilities? c
a. Accounts Payable, Accounts Receivable, Short Term
Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term
Investments
,When Fixed Assets increase what happens to Cash? c
a. Cash stays the same
b. Cash increases
c. Cash decreases
d. Assets decrease
Which is the purpose of the statement of cash flows? c
a. serves as the replacement for the income statement
and balance sheet
b. explains the change in cash balance at one point in
time
c. explains the change in cash balance for one period of
time
d. both (a) and (b) above
The OIROI (Operating Income Return on Investment) b
uses what elements on the income statement?
a. Operating Income, EBIT, Total Liabilities
b. EBIT, Total Assets
c. Sales, Total Assets, Equity
d. Net Margin, Total Current Assets
Why would a company be interested in the TAT(Total c
Asset Turnover) ratio?
a. How efficient assets are at producing income
b. What the turnover of sales is to liabilities
c. How efficient assets are at producing sales
d. How efficient assets are to liabilities and equity
Which of the following gives the largest effective rate b
(APY)
a. 18.6% compounded monthly
b. 18.6% compounded daily
c. 18.6% compounded weekly
d. 18.6% compounded yearly
What does the beta coefficient represent? a
a. It is a statistically-derived measure of volatility
b. It is the Expected Return minus the Growth Rate
c. It is the volatility of the Risk Free Return
d. It is the expected return for a basket of preferred
stocks
, Why is depreciation expense taken out of the net income d
calculation, yet added back at the end?
a. Because fixed assets should remain on the balance
sheet
b. Because depreciation is not a current asset
c. Because depreciation is a non-cash liability
d. Because depreciation expense is tax deductible
Why is the NPV preferred over the IRR? Pick Two b, c
a. It has a higher dollar value
b. It measures the dollar value
c. It is more reliable
d. It is harder to calculate
What does the Degree of Financial Leverage indicate? c
a. The firms cash balance
b. The cost of financed assets
c. The reliance on debt
d. The reliance on assets
If a company has a high degree of financial leverage, d
what does that tell us about the firm's risk profile?
a. Low Risk
b. Appropriate Risk
c. Higher ability to pay debt
d. Higher profits to shareholders
What is the cash cycle? d
a. The speed of collecting cash from customers
b. The amount of cash kept in banks
c. The comparison of debt to cash
d.The amount of time to regenerate cash
Why is float important to understand? d
a. To know how to keep the company profitable
b. To know why the company needs cash
c. To determine when to buy fixed assets
d. To time cash expenditures
e. None of the above
C214 FINANCIAL MANAGEMENT
CONCEPTS ONLY MULTI CHOICE
VERSION | COMPREHENSIVE OA EXAM
PREP 2026 | GRADED A+ |
GUARANTEED SUCCESS
Updated 2026 Questions and Answers | 100% Verified
Exam Prep and Comprehensive Rationales Included
,A basic equation for the balance sheet is: a
a. Equity = Assets - Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities - Equity
d. Assets = Equity - Liabilities
Why is the Balance Sheet known as a permanent b
statement?
a. Because the statement is sent to the SEC.
b. Because the other statements are reset at the end of
the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders.
How do you calculate the change in Retained Earnings? d
a. Ending Retained Earnings - Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT - Change in Cash - Dividends
d. Net Income - Dividends
Which of the following is generally true? c
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net
Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income
Which components are part of total assets? b
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term
Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity
Which components are part of current assets? d
a. Cash, Accounts Receivable, Property Plant &
Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common
Stock
d. Inventory, Cash, Accounts Receivable, Short Term
Investments
Which components are part of Total Liabilities? c
a. Accounts Payable, Accounts Receivable, Short Term
Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term
Investments
,When Fixed Assets increase what happens to Cash? c
a. Cash stays the same
b. Cash increases
c. Cash decreases
d. Assets decrease
Which is the purpose of the statement of cash flows? c
a. serves as the replacement for the income statement
and balance sheet
b. explains the change in cash balance at one point in
time
c. explains the change in cash balance for one period of
time
d. both (a) and (b) above
The OIROI (Operating Income Return on Investment) b
uses what elements on the income statement?
a. Operating Income, EBIT, Total Liabilities
b. EBIT, Total Assets
c. Sales, Total Assets, Equity
d. Net Margin, Total Current Assets
Why would a company be interested in the TAT(Total c
Asset Turnover) ratio?
a. How efficient assets are at producing income
b. What the turnover of sales is to liabilities
c. How efficient assets are at producing sales
d. How efficient assets are to liabilities and equity
Which of the following gives the largest effective rate b
(APY)
a. 18.6% compounded monthly
b. 18.6% compounded daily
c. 18.6% compounded weekly
d. 18.6% compounded yearly
What does the beta coefficient represent? a
a. It is a statistically-derived measure of volatility
b. It is the Expected Return minus the Growth Rate
c. It is the volatility of the Risk Free Return
d. It is the expected return for a basket of preferred
stocks
, Why is depreciation expense taken out of the net income d
calculation, yet added back at the end?
a. Because fixed assets should remain on the balance
sheet
b. Because depreciation is not a current asset
c. Because depreciation is a non-cash liability
d. Because depreciation expense is tax deductible
Why is the NPV preferred over the IRR? Pick Two b, c
a. It has a higher dollar value
b. It measures the dollar value
c. It is more reliable
d. It is harder to calculate
What does the Degree of Financial Leverage indicate? c
a. The firms cash balance
b. The cost of financed assets
c. The reliance on debt
d. The reliance on assets
If a company has a high degree of financial leverage, d
what does that tell us about the firm's risk profile?
a. Low Risk
b. Appropriate Risk
c. Higher ability to pay debt
d. Higher profits to shareholders
What is the cash cycle? d
a. The speed of collecting cash from customers
b. The amount of cash kept in banks
c. The comparison of debt to cash
d.The amount of time to regenerate cash
Why is float important to understand? d
a. To know how to keep the company profitable
b. To know why the company needs cash
c. To determine when to buy fixed assets
d. To time cash expenditures
e. None of the above
