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Western Governors University
LANIF 412C
WGU College of Business — C214 Financial Management Final Review
O N L I N E . N O N P R O F I T. C O M P E T E N C Y - B A S E D .
EST. 1997
WGU C214 Financial Management — Final Review
OBJECTIVE ASSESSMENT PREPARATION — KEY QUESTIONS, CONCEPTS & FORMULAS | 2026/2027
INSTITUTION Western Governors University (WGU) COURSE CODE C214 — Financial Management
PROGRAM Master of Business Administration (MBA) ACADEMIC YEAR
DOCUMENT TYPE Final Exam Review — Q&A Quick Reference TOTAL Q&A ITEMS 50+ Key Final Review Questions & Answers
SUBJECT AREAS SCF, Valuation, Capital Budgeting, Risk, Markets, Regulation FORMAT Question & Answer — Concise Review Format
HOW TO USE THIS FINAL REVIEW
▸ This is a concise Q&A review covering the most heavily tested concepts on the C214 Objective Assessment.
▸ Questions are drawn from the WGU C214 Bootcamps, Study Guide, Pre-Assessment, and Concepts Quizlets.
▸ Each entry provides the question, correct answer, and key details. Use for rapid review before the OA.
▸ All content reflects current financial management concepts and MBA-level curriculum standards.
SECTION I — STATEMENT OF CASH FLOWS, FINANCIAL STATEMENTS & RATIOS Questions 1 – 18
Q1: What does the Statement of Cash Flows show?
The change in cash balance for a period of time. Focuses only on items where cash is received or cash is paid.
Q2: What is Cash Flow from Operating Activities (CFO)?
Cash flow generated from day-to-day business operations. Deals with Current Assets and Current Liabilities.
CFO = Net Income + Depreciation Expense - Increase in NWC
Q3: What is Cash Flow from Investing Activities (CFI)?
Cash flow from investments in long-term assets. CFI = (Change in Net PPE + Depreciation Expense) × (-1).
Q4: What is Cash Flow from Financing Activities (CFF)?
Cash flow used to fund the company. Includes Debt and Equity. CFF = Increase in Debt + Increase in Stock - Dividends Paid.
Q5: How does an increase in Accounts Receivable impact CFO?
An increase in AR DECREASES CFO (sales made but cash not yet collected).
Q6: How does an increase in Accounts Payable impact CFO?
An increase in AP INCREASES CFO (goods/services received but not yet paid for).
Q7: Which financial statement is prepared at a POINT in time?
The Balance Sheet (snapshot of assets, liabilities, and equity at a specific date).
Q8: Which financial statements are prepared for a PERIOD of time?
Income Statement, Retained Earnings Statement, and Statement of Cash Flows.
Q9: Define the Current Ratio and what it measures.
Current Assets / Current Liabilities. A measure of short-term liquidity to pay short-term obligations.
Q10: What is Free Cash Flow?
Cash flows from operating activities minus cash necessary for reinvestment in PPE. Represents cash available for distribution after funding required reinvestment.
Q11: What is the DuPont Formula?
ROE = Net Margin × Total Asset Turnover × Financial Leverage Ratio. Decomposes ROE into profitability, efficiency, and leverage.
Q12: What is the difference between ROA and ROE?
ROA = NI / Assets; ROE = NI / Equity. A firm effectively using debt will have ROE > ROA. The difference speaks to the effectiveness of financing policy.
Q13: Give two examples of accounting estimates used in financial accounting.
Depreciation (useful life and salvage value) and bad debt expense.
Q14: Give an example of an accounting difference between firms.
Companies using different inventory valuation methods (FIFO vs. LIFO).
Q15: Why might accounting income and taxable income be different?
Income for SEC follows GAAP; income for tax purposes follows IRS rules. Actual taxes paid will be less than GAAP taxes due to depreciation differences and other timing items.
Q16: What ratios are used to determine efficient working capital management?
Current Ratio, Cash Ratio, and Receivables Turnover Ratio.
Q17: How do firms manage working capital?
Collect funds from customers as quickly as possible and pay bills as slowly as possible (optimize the cash conversion cycle).
Q18: What are the three costs associated with inventory?
Product Costs, Storage Costs, and Opportunity Costs.
SECTION II — VALUATION, BONDS, STOCKS & CAPITAL MARKETS Questions 19 – 36
Q19: Define the Efficient Frontier.
Maximizes expected return for a given level of risk (or minimizes risk for a given return).
Q20: Where would a risk-averse investor fall on the efficient frontier? A risk-taking investor?
Risk-averse: 100% Bonds. Risk-taking: 100% Stocks.
Q21: What is Beta (β)?
A measure of systematic risk. β = 1 is average market risk. β < 1 = less risk. β > 1 = more risk. Key input in CAPM.
Q22: What is the intrinsic value of a stock under Efficient Market Hypothesis?
The present value of the stock's after-tax net cash flows.
Q23: When a dividend question states "was paid recently" or "just paid," what must be calculated first?
Expected Dividend (D1) = Recent Dividend × (1 + Growth Rate).
Q24: For every bond question, what must be entered in the calculator?
FV = $1,000 (par value). PMT = $1,000 × Coupon Rate. N = number of years. I/Y = yield/market rate.
Western Governors University
LANIF 412C
WGU College of Business — C214 Financial Management Final Review
O N L I N E . N O N P R O F I T. C O M P E T E N C Y - B A S E D .
EST. 1997
WGU C214 Financial Management — Final Review
OBJECTIVE ASSESSMENT PREPARATION — KEY QUESTIONS, CONCEPTS & FORMULAS | 2026/2027
INSTITUTION Western Governors University (WGU) COURSE CODE C214 — Financial Management
PROGRAM Master of Business Administration (MBA) ACADEMIC YEAR
DOCUMENT TYPE Final Exam Review — Q&A Quick Reference TOTAL Q&A ITEMS 50+ Key Final Review Questions & Answers
SUBJECT AREAS SCF, Valuation, Capital Budgeting, Risk, Markets, Regulation FORMAT Question & Answer — Concise Review Format
HOW TO USE THIS FINAL REVIEW
▸ This is a concise Q&A review covering the most heavily tested concepts on the C214 Objective Assessment.
▸ Questions are drawn from the WGU C214 Bootcamps, Study Guide, Pre-Assessment, and Concepts Quizlets.
▸ Each entry provides the question, correct answer, and key details. Use for rapid review before the OA.
▸ All content reflects current financial management concepts and MBA-level curriculum standards.
SECTION I — STATEMENT OF CASH FLOWS, FINANCIAL STATEMENTS & RATIOS Questions 1 – 18
Q1: What does the Statement of Cash Flows show?
The change in cash balance for a period of time. Focuses only on items where cash is received or cash is paid.
Q2: What is Cash Flow from Operating Activities (CFO)?
Cash flow generated from day-to-day business operations. Deals with Current Assets and Current Liabilities.
CFO = Net Income + Depreciation Expense - Increase in NWC
Q3: What is Cash Flow from Investing Activities (CFI)?
Cash flow from investments in long-term assets. CFI = (Change in Net PPE + Depreciation Expense) × (-1).
Q4: What is Cash Flow from Financing Activities (CFF)?
Cash flow used to fund the company. Includes Debt and Equity. CFF = Increase in Debt + Increase in Stock - Dividends Paid.
Q5: How does an increase in Accounts Receivable impact CFO?
An increase in AR DECREASES CFO (sales made but cash not yet collected).
Q6: How does an increase in Accounts Payable impact CFO?
An increase in AP INCREASES CFO (goods/services received but not yet paid for).
Q7: Which financial statement is prepared at a POINT in time?
The Balance Sheet (snapshot of assets, liabilities, and equity at a specific date).
Q8: Which financial statements are prepared for a PERIOD of time?
Income Statement, Retained Earnings Statement, and Statement of Cash Flows.
Q9: Define the Current Ratio and what it measures.
Current Assets / Current Liabilities. A measure of short-term liquidity to pay short-term obligations.
Q10: What is Free Cash Flow?
Cash flows from operating activities minus cash necessary for reinvestment in PPE. Represents cash available for distribution after funding required reinvestment.
Q11: What is the DuPont Formula?
ROE = Net Margin × Total Asset Turnover × Financial Leverage Ratio. Decomposes ROE into profitability, efficiency, and leverage.
Q12: What is the difference between ROA and ROE?
ROA = NI / Assets; ROE = NI / Equity. A firm effectively using debt will have ROE > ROA. The difference speaks to the effectiveness of financing policy.
Q13: Give two examples of accounting estimates used in financial accounting.
Depreciation (useful life and salvage value) and bad debt expense.
Q14: Give an example of an accounting difference between firms.
Companies using different inventory valuation methods (FIFO vs. LIFO).
Q15: Why might accounting income and taxable income be different?
Income for SEC follows GAAP; income for tax purposes follows IRS rules. Actual taxes paid will be less than GAAP taxes due to depreciation differences and other timing items.
Q16: What ratios are used to determine efficient working capital management?
Current Ratio, Cash Ratio, and Receivables Turnover Ratio.
Q17: How do firms manage working capital?
Collect funds from customers as quickly as possible and pay bills as slowly as possible (optimize the cash conversion cycle).
Q18: What are the three costs associated with inventory?
Product Costs, Storage Costs, and Opportunity Costs.
SECTION II — VALUATION, BONDS, STOCKS & CAPITAL MARKETS Questions 19 – 36
Q19: Define the Efficient Frontier.
Maximizes expected return for a given level of risk (or minimizes risk for a given return).
Q20: Where would a risk-averse investor fall on the efficient frontier? A risk-taking investor?
Risk-averse: 100% Bonds. Risk-taking: 100% Stocks.
Q21: What is Beta (β)?
A measure of systematic risk. β = 1 is average market risk. β < 1 = less risk. β > 1 = more risk. Key input in CAPM.
Q22: What is the intrinsic value of a stock under Efficient Market Hypothesis?
The present value of the stock's after-tax net cash flows.
Q23: When a dividend question states "was paid recently" or "just paid," what must be calculated first?
Expected Dividend (D1) = Recent Dividend × (1 + Growth Rate).
Q24: For every bond question, what must be entered in the calculator?
FV = $1,000 (par value). PMT = $1,000 × Coupon Rate. N = number of years. I/Y = yield/market rate.
