WGU - C214 Financial Management – Final With
CompletebSolution
Statement of Cash Flows
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)
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)
Cash flow that is generated from investments in long term assets.
Cash Flow from Financing Activities (CFF)
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?
An Increase in Accounts receivable will decrease CFO
How does an increase in Accounts payable impact CFO?
An Increase in Accounts Payable will increase CFO
What financial statement is prepared at a point in time
Balance Sheet
What financial statements are prepared for a period of time?
· Income Statement
· Retained Earnings Statement
· Statement of Cash Flows
Define Efficient Frontier
Maximizes expected return for a given level of risk
Where would a risk averse investor fall on the efficient frontier?
100% Bonds
Where would a risk-taking investor fall on the efficient frontier?
100% Stocks
What is a Beta?
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?
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?
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?
Expected Dividend
For every Bond question, what must be entered?
FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
CompletebSolution
Statement of Cash Flows
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)
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)
Cash flow that is generated from investments in long term assets.
Cash Flow from Financing Activities (CFF)
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?
An Increase in Accounts receivable will decrease CFO
How does an increase in Accounts payable impact CFO?
An Increase in Accounts Payable will increase CFO
What financial statement is prepared at a point in time
Balance Sheet
What financial statements are prepared for a period of time?
· Income Statement
· Retained Earnings Statement
· Statement of Cash Flows
Define Efficient Frontier
Maximizes expected return for a given level of risk
Where would a risk averse investor fall on the efficient frontier?
100% Bonds
Where would a risk-taking investor fall on the efficient frontier?
100% Stocks
What is a Beta?
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?
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?
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?
Expected Dividend
For every Bond question, what must be entered?
FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
