WGU C214 Finance Exam 125 Questions with
Verified Answers
=Current Assets/Current Liabilities - CORRECT ANSWER Current Ratio
= (Current Assets - Inventory) / Current Liabilities - CORRECT ANSWER Quick Ratio
= Credit Sales / AR - CORRECT ANSWER Accounts Receivable (AR) Turnover
= 365 / AR Turnover - CORRECT ANSWER Average Collection Period (ACP)
=Current Assets-Current Liabilities/Total Assets - CORRECT ANSWER Net Working
Capital to Total Asset Ratio
= 365 / Inventory Turnover - CORRECT ANSWER Days on Hand (DOH)
Measure of the firm's ability to meet its short term obligations - CORRECT
ANSWER Liquidity
= Net Income + depreciation expense - CORRECT ANSWER CFO
= change in equity + change in debt - dividends - CORRECT ANSWER CFF
= Net Income - Dividends - CORRECT ANSWER Change in retained earnings
,= Change in Net PP&E + Depreciation Expense - CORRECT ANSWER CFI
= Gross PP&E (end) - Gross PP&E (begin) - CORRECT ANSWER CFI
Net Operating Profit After Taxes - CORRECT ANSWER NOPAT
= EBIT (1-tax rate) + Depreciation - CAPEX - Increases in NWC - CORRECT ANSWER
FCFF (Free Cash Flow to the Firm)
= NI + Depreciation - CAPEX - Increases in NWC + Increases in Debt - CORRECT
ANSWER FCFE (Free Cash Flow to Equity)
Capital Expenditure on PP&E; Frequently measured as CFI - CORRECT ANSWER
CAPEX
= current assets - current liabilities - CORRECT ANSWER NWC (Net working
Capital)
Net Operating Profit After Taxes (NOPAT) - CORRECT ANSWER EBIT (1-tax rate), is
referred to as
= COGS / Inventory - CORRECT ANSWER Inventory Turnover
= Sales / Total Assets - CORRECT ANSWER Total Asset Turnover (TAT)
, = Sales/Fixed Assets - CORRECT ANSWER Fixed Asset Turnover (FAT)
= EBIT / Total Assets - CORRECT ANSWER Operating Income Return on Investment
(OIROI)
= Total Liabilities / Total Assets - CORRECT ANSWER Debt Ratio
= Interest-Bearing Debt / (Interest-Bearing Debt + Owners' Equity) - CORRECT
ANSWER Interest-Bearing Debt to Total Capital (IBDTC)
= EBIT / Interest Expense - CORRECT ANSWER Times Interest Earned Ratio (TIE)
= Total Assets / Equity
indicate the extent to which borrowed or debt funds are used to finance assets, as
well as the ability of a firm to meet its debt payment obligations - CORRECT
ANSWER Financial Leverage Ratio (FLR)
Efficiency, Liquidity, and Financing - CORRECT ANSWER Drivers of profitability
= Net Income / Total Assets - CORRECT ANSWER Return on Assets (ROA)
= Net Income / Owners' Equity - CORRECT ANSWER Return on Equity (ROE)
Verified Answers
=Current Assets/Current Liabilities - CORRECT ANSWER Current Ratio
= (Current Assets - Inventory) / Current Liabilities - CORRECT ANSWER Quick Ratio
= Credit Sales / AR - CORRECT ANSWER Accounts Receivable (AR) Turnover
= 365 / AR Turnover - CORRECT ANSWER Average Collection Period (ACP)
=Current Assets-Current Liabilities/Total Assets - CORRECT ANSWER Net Working
Capital to Total Asset Ratio
= 365 / Inventory Turnover - CORRECT ANSWER Days on Hand (DOH)
Measure of the firm's ability to meet its short term obligations - CORRECT
ANSWER Liquidity
= Net Income + depreciation expense - CORRECT ANSWER CFO
= change in equity + change in debt - dividends - CORRECT ANSWER CFF
= Net Income - Dividends - CORRECT ANSWER Change in retained earnings
,= Change in Net PP&E + Depreciation Expense - CORRECT ANSWER CFI
= Gross PP&E (end) - Gross PP&E (begin) - CORRECT ANSWER CFI
Net Operating Profit After Taxes - CORRECT ANSWER NOPAT
= EBIT (1-tax rate) + Depreciation - CAPEX - Increases in NWC - CORRECT ANSWER
FCFF (Free Cash Flow to the Firm)
= NI + Depreciation - CAPEX - Increases in NWC + Increases in Debt - CORRECT
ANSWER FCFE (Free Cash Flow to Equity)
Capital Expenditure on PP&E; Frequently measured as CFI - CORRECT ANSWER
CAPEX
= current assets - current liabilities - CORRECT ANSWER NWC (Net working
Capital)
Net Operating Profit After Taxes (NOPAT) - CORRECT ANSWER EBIT (1-tax rate), is
referred to as
= COGS / Inventory - CORRECT ANSWER Inventory Turnover
= Sales / Total Assets - CORRECT ANSWER Total Asset Turnover (TAT)
, = Sales/Fixed Assets - CORRECT ANSWER Fixed Asset Turnover (FAT)
= EBIT / Total Assets - CORRECT ANSWER Operating Income Return on Investment
(OIROI)
= Total Liabilities / Total Assets - CORRECT ANSWER Debt Ratio
= Interest-Bearing Debt / (Interest-Bearing Debt + Owners' Equity) - CORRECT
ANSWER Interest-Bearing Debt to Total Capital (IBDTC)
= EBIT / Interest Expense - CORRECT ANSWER Times Interest Earned Ratio (TIE)
= Total Assets / Equity
indicate the extent to which borrowed or debt funds are used to finance assets, as
well as the ability of a firm to meet its debt payment obligations - CORRECT
ANSWER Financial Leverage Ratio (FLR)
Efficiency, Liquidity, and Financing - CORRECT ANSWER Drivers of profitability
= Net Income / Total Assets - CORRECT ANSWER Return on Assets (ROA)
= Net Income / Owners' Equity - CORRECT ANSWER Return on Equity (ROE)
