WGU C214 OA Pre Assessment Exam 2024 UPDATE
least liquid asset - ANSWER: inventory
Inventory consists of 3 parts - ANSWER: Raw material, Work in progress, & finished
goods
Collection Float - ANSWER: Time from account receivable to collect cash
Components of WACC (Weighted Average Cost of Capital) - ANSWER: Market value,
tax, equity/common stock, cost of capital, debt, preferred stock, ALL OF THE ABOVE
3 Methods used to Value a Firm/Company - ANSWER: Replacement costs (car
wrecked - KBB or AutoTrader Magazine) - compare similar products if need to be
replaced
Comparable Multiple (Costco vs Walmart) - P/E Ratio
Discounted Cash Flow (DCF) - Bring future money or cash flow to today's value (PV)
ALL OF THE ABOVE
Why do companies keep cash for day to day operations - ANSWER: To pay bills
What are your CURRENT assets? (Own by company) - ANSWER: Inventory, cash,
accts receivable, short term investments
Current Liabilities - ANSWER: accounts payable & accrued expenses
Operating Leverage (sidebar formula) - ANSWER: Carries business risk
BETA (Risk of stock price of specific company) - ANSWER: Sensitive to market
changes - NOT A MARKET RISK
NPV vs IRR - ANSWER: Net Present Value (NPV) - present value of future inflows
exceeds initial investment - means NPV greater than initial startup (NPV = 30 - 20
startup) = 10 positive- accept project
Internal Rate of Return (IRR) is discount rate that forces NPV to equal zero
Both have to be positive numbers to choose the project
Hedging - ANSWER: Eliminating risk
Volker Rule (VRL) - ANSWER: Limits proprietary/hedge fund trading by banks
FINRA (Financial Industry Regulatory Authority) - ANSWER: Every player in the
market behaves ethically and honestly. Check sales practices, bar unethical persons;
competency test
EX: Board created after SEC, Traders are not to give insider information, Every form
and agreement are done, Traders are to get regular training
,IFRS (International Financial Reporting Standards) - ANSWER: US is NOT a part of this
yet
They want everyone to use the format and standards to do their balance sheets
ROE vs ROA (What is similar - Use sidebar formulas) - ANSWER: Both use Net
Incomes
Outsourcing effects - ANSWER: Domestic employment decreases (workers in
America lose their jobs)
Profits of the company likely go up, and price of product is cheaper
Tariffs - ANSWER: Additional taxes
Protection for domestic economy
Words used interchangeably - ANSWER: PV= price or how much, amount
Sales = Revenue
Equity = Common equity/stock
Preferred Stock = Hybrid (for raising money and can be used as Debt)
Treasury rate = Risk Free Rate (RF)
Balance Sheet = Snapshot
Par Value = Face Value ($1,000)
EBIT = Operating Income
Capital Budget Formulas (Sidebar) - ANSWER: Initial Cash Outflow = Asses Cost +
Shipping & Installation + Increase in NWC
Differential Cash Flow = NI + Depreciation Expense
Terminal Cash Flow = Salvage Value - Taxes Paid + NWC Recapture
Treasury Securities - ANSWER: Issued by the Federal (US) Government
Dealer Markets - ANSWER: Online
No physical location
Auction Markets - ANSWER: NYSE - New York Stock exchange
Goal of Private Company - ANSWER: Keep control of business
Goal of Public Company - ANSWER: Maximize shareholder's value
Annuity Due - ANSWER: Pay at the beginning of a period (RENT)
Ordinary Annuities - ANSWER: Pay at the end of the period (Credit Cards)
APY vs APR - ANSWER: APY = Annual Percentage Yield
APR = Annual Percentage Rate
APR is EQUAL to APY when period is = 1
APY is ALWAYS greater after period 1
, Income Statement for Accounting - ANSWER: For reporting
Income Statement for Taxes - ANSWER: For the IRS
Matching Principle - ANSWER: Matching revenues to expenses during a period
Income Statement - ANSWER: Over a period of time
Balance Sheet (Snapshot) - ANSWER: One point in time
Retained Earnings (Sidebar Formula) - ANSWER: Beg RE + NI - Dividends Paid
Time Value of money components (Calculator Keys) - ANSWER: N: Time, I/Y: Yield or
Interest Rate, PV: Present Value, PMT: Payment, FV: Future Value
Rule 144-A - ANSWER: Safe harbor, protection for US investors raising capital in the
Private Market (NOT regulated by SEC), sell private securities in US to US investors
Regulation S - ANSWER: Safe harbor, protection also for NON-US Investors raising
money in capital market, sell private securities off-shore to foreigner investors
Difference between Rule 144 A & Regulation S - ANSWER: Rule 144A is for US
Citizens
Regulation S is for NON-US Citizens
CF vs FCF - ANSWER: CF = Cash Flow how companies note or record movement of
cash (inflow/outflow)
FCF = Free Cash Flow is cash that is left after all bills are paid
CFO, CFI, & CFF (Sidebar Formulas) - ANSWER: 3 Statements of Cash Flows
Financial Leverage - ANSWER: Borrowing, debt, financing, or loan (risk of not paying
back)
2 Financial Instruments - ANSWER: Stocks & Bonds
Do we include cost of survey in initial Cash Flow? (Sidebar formula) - ANSWER: No,
we only include Cost of Equipment, Installation & Shipping, & NWC
Does Capital Budgeting have an effect on Financial Forecasting? - ANSWER: Yes
Sarbanes Oxley (SOX) Act - ANSWER: They ensure STRONG internal control (primary
reason), prevent investor fraud, insures truthfulness in SEC reporting, board
members represents stockholders in good faith, accounting firm must be honest in
their reporting, transparency, audit of financial controls
least liquid asset - ANSWER: inventory
Inventory consists of 3 parts - ANSWER: Raw material, Work in progress, & finished
goods
Collection Float - ANSWER: Time from account receivable to collect cash
Components of WACC (Weighted Average Cost of Capital) - ANSWER: Market value,
tax, equity/common stock, cost of capital, debt, preferred stock, ALL OF THE ABOVE
3 Methods used to Value a Firm/Company - ANSWER: Replacement costs (car
wrecked - KBB or AutoTrader Magazine) - compare similar products if need to be
replaced
Comparable Multiple (Costco vs Walmart) - P/E Ratio
Discounted Cash Flow (DCF) - Bring future money or cash flow to today's value (PV)
ALL OF THE ABOVE
Why do companies keep cash for day to day operations - ANSWER: To pay bills
What are your CURRENT assets? (Own by company) - ANSWER: Inventory, cash,
accts receivable, short term investments
Current Liabilities - ANSWER: accounts payable & accrued expenses
Operating Leverage (sidebar formula) - ANSWER: Carries business risk
BETA (Risk of stock price of specific company) - ANSWER: Sensitive to market
changes - NOT A MARKET RISK
NPV vs IRR - ANSWER: Net Present Value (NPV) - present value of future inflows
exceeds initial investment - means NPV greater than initial startup (NPV = 30 - 20
startup) = 10 positive- accept project
Internal Rate of Return (IRR) is discount rate that forces NPV to equal zero
Both have to be positive numbers to choose the project
Hedging - ANSWER: Eliminating risk
Volker Rule (VRL) - ANSWER: Limits proprietary/hedge fund trading by banks
FINRA (Financial Industry Regulatory Authority) - ANSWER: Every player in the
market behaves ethically and honestly. Check sales practices, bar unethical persons;
competency test
EX: Board created after SEC, Traders are not to give insider information, Every form
and agreement are done, Traders are to get regular training
,IFRS (International Financial Reporting Standards) - ANSWER: US is NOT a part of this
yet
They want everyone to use the format and standards to do their balance sheets
ROE vs ROA (What is similar - Use sidebar formulas) - ANSWER: Both use Net
Incomes
Outsourcing effects - ANSWER: Domestic employment decreases (workers in
America lose their jobs)
Profits of the company likely go up, and price of product is cheaper
Tariffs - ANSWER: Additional taxes
Protection for domestic economy
Words used interchangeably - ANSWER: PV= price or how much, amount
Sales = Revenue
Equity = Common equity/stock
Preferred Stock = Hybrid (for raising money and can be used as Debt)
Treasury rate = Risk Free Rate (RF)
Balance Sheet = Snapshot
Par Value = Face Value ($1,000)
EBIT = Operating Income
Capital Budget Formulas (Sidebar) - ANSWER: Initial Cash Outflow = Asses Cost +
Shipping & Installation + Increase in NWC
Differential Cash Flow = NI + Depreciation Expense
Terminal Cash Flow = Salvage Value - Taxes Paid + NWC Recapture
Treasury Securities - ANSWER: Issued by the Federal (US) Government
Dealer Markets - ANSWER: Online
No physical location
Auction Markets - ANSWER: NYSE - New York Stock exchange
Goal of Private Company - ANSWER: Keep control of business
Goal of Public Company - ANSWER: Maximize shareholder's value
Annuity Due - ANSWER: Pay at the beginning of a period (RENT)
Ordinary Annuities - ANSWER: Pay at the end of the period (Credit Cards)
APY vs APR - ANSWER: APY = Annual Percentage Yield
APR = Annual Percentage Rate
APR is EQUAL to APY when period is = 1
APY is ALWAYS greater after period 1
, Income Statement for Accounting - ANSWER: For reporting
Income Statement for Taxes - ANSWER: For the IRS
Matching Principle - ANSWER: Matching revenues to expenses during a period
Income Statement - ANSWER: Over a period of time
Balance Sheet (Snapshot) - ANSWER: One point in time
Retained Earnings (Sidebar Formula) - ANSWER: Beg RE + NI - Dividends Paid
Time Value of money components (Calculator Keys) - ANSWER: N: Time, I/Y: Yield or
Interest Rate, PV: Present Value, PMT: Payment, FV: Future Value
Rule 144-A - ANSWER: Safe harbor, protection for US investors raising capital in the
Private Market (NOT regulated by SEC), sell private securities in US to US investors
Regulation S - ANSWER: Safe harbor, protection also for NON-US Investors raising
money in capital market, sell private securities off-shore to foreigner investors
Difference between Rule 144 A & Regulation S - ANSWER: Rule 144A is for US
Citizens
Regulation S is for NON-US Citizens
CF vs FCF - ANSWER: CF = Cash Flow how companies note or record movement of
cash (inflow/outflow)
FCF = Free Cash Flow is cash that is left after all bills are paid
CFO, CFI, & CFF (Sidebar Formulas) - ANSWER: 3 Statements of Cash Flows
Financial Leverage - ANSWER: Borrowing, debt, financing, or loan (risk of not paying
back)
2 Financial Instruments - ANSWER: Stocks & Bonds
Do we include cost of survey in initial Cash Flow? (Sidebar formula) - ANSWER: No,
we only include Cost of Equipment, Installation & Shipping, & NWC
Does Capital Budgeting have an effect on Financial Forecasting? - ANSWER: Yes
Sarbanes Oxley (SOX) Act - ANSWER: They ensure STRONG internal control (primary
reason), prevent investor fraud, insures truthfulness in SEC reporting, board
members represents stockholders in good faith, accounting firm must be honest in
their reporting, transparency, audit of financial controls
