WGU D366 Pre Assessment Conceptual Preparation
for OA 90 Questions with Verified Answers
A financial analyst is required to analyze the financial statements of Alliah
Company. While analyzing, the analyst discovered that the company does not
have adequate current assets to meet its total current liabilities. Thus, the
company might face difficulties in meeting its upcoming payments toward its
current liabilities. Which method did the financial analyst use to make this
analysis? - CORRECT ANSWER The financial analyst calculated various short-term
liquidity ratios.
A financial analyst who was analyzing Company P's financial statements concluded
that this year, the company's revenue increased by 20%, gross income by 16%,
and net income by 10%. Last year, the same items increased by 12%, 6%, and 4%,
respectively. Which financial statement analysis tool did the financial analyst use
to conclude? - CORRECT ANSWER Percentage change financial statements
A company evaluates the industry's economic conditions using Porter's five forces
model. Using the analysis, the company wishes to identify the vertical competition
in the value chain and its impact on its performance. Which one of Porter's five
forces should the company refer to? - CORRECT ANSWER Buyer power
A start-up's chief executive officer (CEO) plans to expand the business by
acquisition of a mature company. The CEO is particularly interested in companies
that exhibit superior sales volume and market share and is willing to accept low
profit margins.Which company meets the CEO's investment criteria based on the
framework for strategic analysis? - CORRECT ANSWER A company that sells
nondifferentiated products
,Corollary Marketing has prepared the common-size balance sheet for the current
year and has determined the following percentages:
Cash and equivalents: 15%
Receivables: 20%
Property, plant, and equipment: 12%
Accumulated depreciation: (5%)
Accounts payable: 9%
How does Corollary Marketing calculate these percentages? - CORRECT ANSWER
All items are a percentage of total assets.
Orange Zest Company specializes in household goods and appliances. In recent
years, the market has become increasingly competitive with the emergence of
new entrants. In light of this, the business decided to continue selling its
nondifferentiated items while taking a smaller profit margin in exchange for
increased market share and sales volume. Which strategy did the company choose
to compete in its industry? - CORRECT ANSWER Low-cost leadership strategy
A company's financial analyst identified that the cost of goods sold in a common-
size income statement was 18% in the previous year. However, it changed to 21%
in the current year. What does this analysis indicate? - CORRECT ANSWER The cost
of goods sold as a percentage of sales has increased.
A company's financial analyst analyzes the current year's income statement and
balance sheet. The analyst has already calculated some of the profitability and risk
ratios. The company wants the analyst to determine what a reasonable price for
the company's common shares is. Which ratio will help the analyst in fulfilling the
requirement? - CORRECT ANSWER Price-earnings ratio
, A firm's management team is examining the income statement and is concerned
that while revenues are growing, gross profit is declining. Which financial activity
caused the decline? - CORRECT ANSWER An increase in cost of sales
A hardware manufacturing firm has high expenditures on property, plant, and
equipment (PPE). Where in the statement of cash flows are the net additions
reflected? - CORRECT ANSWER Investing
A financial analyst analyzes a company's recently published annual report to
estimate the company's future earnings. While adjusting the company's net
income to estimate the company's future profitability, the company excluded the
income on investment securities deemed available for sale. Why did the analyst
exclude the income on investment securities deemed available for sale? -
CORRECT ANSWER Because the income is treated as transitory
A financial analyst is analyzing Sparkit's financial statement. The analyst noticed
that the company uses special purpose entities (SPE) to meet its short-term needs
and treats this transaction as a collateralized loan. What should the analyst
consider while analyzing Sparkit's liabilities? - CORRECT ANSWER Sparkit enjoys
the benefits and takes the economic risks of the receivables.
A financial analyst excluded other comprehensive items reported in the income
statement while estimating the company's future earnings.Why did the analyst
exclude this item from the analysis? - CORRECT ANSWER As these are considered
transitory income or loss
for OA 90 Questions with Verified Answers
A financial analyst is required to analyze the financial statements of Alliah
Company. While analyzing, the analyst discovered that the company does not
have adequate current assets to meet its total current liabilities. Thus, the
company might face difficulties in meeting its upcoming payments toward its
current liabilities. Which method did the financial analyst use to make this
analysis? - CORRECT ANSWER The financial analyst calculated various short-term
liquidity ratios.
A financial analyst who was analyzing Company P's financial statements concluded
that this year, the company's revenue increased by 20%, gross income by 16%,
and net income by 10%. Last year, the same items increased by 12%, 6%, and 4%,
respectively. Which financial statement analysis tool did the financial analyst use
to conclude? - CORRECT ANSWER Percentage change financial statements
A company evaluates the industry's economic conditions using Porter's five forces
model. Using the analysis, the company wishes to identify the vertical competition
in the value chain and its impact on its performance. Which one of Porter's five
forces should the company refer to? - CORRECT ANSWER Buyer power
A start-up's chief executive officer (CEO) plans to expand the business by
acquisition of a mature company. The CEO is particularly interested in companies
that exhibit superior sales volume and market share and is willing to accept low
profit margins.Which company meets the CEO's investment criteria based on the
framework for strategic analysis? - CORRECT ANSWER A company that sells
nondifferentiated products
,Corollary Marketing has prepared the common-size balance sheet for the current
year and has determined the following percentages:
Cash and equivalents: 15%
Receivables: 20%
Property, plant, and equipment: 12%
Accumulated depreciation: (5%)
Accounts payable: 9%
How does Corollary Marketing calculate these percentages? - CORRECT ANSWER
All items are a percentage of total assets.
Orange Zest Company specializes in household goods and appliances. In recent
years, the market has become increasingly competitive with the emergence of
new entrants. In light of this, the business decided to continue selling its
nondifferentiated items while taking a smaller profit margin in exchange for
increased market share and sales volume. Which strategy did the company choose
to compete in its industry? - CORRECT ANSWER Low-cost leadership strategy
A company's financial analyst identified that the cost of goods sold in a common-
size income statement was 18% in the previous year. However, it changed to 21%
in the current year. What does this analysis indicate? - CORRECT ANSWER The cost
of goods sold as a percentage of sales has increased.
A company's financial analyst analyzes the current year's income statement and
balance sheet. The analyst has already calculated some of the profitability and risk
ratios. The company wants the analyst to determine what a reasonable price for
the company's common shares is. Which ratio will help the analyst in fulfilling the
requirement? - CORRECT ANSWER Price-earnings ratio
, A firm's management team is examining the income statement and is concerned
that while revenues are growing, gross profit is declining. Which financial activity
caused the decline? - CORRECT ANSWER An increase in cost of sales
A hardware manufacturing firm has high expenditures on property, plant, and
equipment (PPE). Where in the statement of cash flows are the net additions
reflected? - CORRECT ANSWER Investing
A financial analyst analyzes a company's recently published annual report to
estimate the company's future earnings. While adjusting the company's net
income to estimate the company's future profitability, the company excluded the
income on investment securities deemed available for sale. Why did the analyst
exclude the income on investment securities deemed available for sale? -
CORRECT ANSWER Because the income is treated as transitory
A financial analyst is analyzing Sparkit's financial statement. The analyst noticed
that the company uses special purpose entities (SPE) to meet its short-term needs
and treats this transaction as a collateralized loan. What should the analyst
consider while analyzing Sparkit's liabilities? - CORRECT ANSWER Sparkit enjoys
the benefits and takes the economic risks of the receivables.
A financial analyst excluded other comprehensive items reported in the income
statement while estimating the company's future earnings.Why did the analyst
exclude this item from the analysis? - CORRECT ANSWER As these are considered
transitory income or loss
