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WGU C214 FINANCIAL MANAGEMENT RETAKE
OBJECTIVE ASSESSMENT 2026/2027 | Latest
Questions & Verified Answers | Remediation Focus |
Pass Guaranteed - A+ Graded
Section 1: Financial Statement Analysis & Ratio Interpretation (Q1-12)
Q1. A company reports current assets of $450,000 and current liabilities of $300,000.
Inventory is $180,000 and prepaid expenses are $20,000. What is the quick ratio?
A. 1.50
B. 0.83
C. 1.17
D. 2.25
B. 0.83 [CORRECT]
Rationale: Quick ratio = (Current Assets - Inventory - Prepaid Expenses) / Current
Liabilities = ($450,000 - $180,000 - $20,000) / $300,000 = $250,000 / $300,000 = 0.83.
Option A is the current ratio ($450K/$300K). Option C subtracts only inventory.
Option D incorrectly adds inventory to liabilities. Common retake error: including
inventory or prepaid expenses in the numerator.
Correct Answer: B
Q2. A company reports net income of $500,000, sales of $4,000,000, total assets of
$3,000,000, and total equity of $1,500,000. What is the return on equity (ROE) using
DuPont analysis?
A. 16.7%
B. 33.3%
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C. 66.7%
D. 12.5%
B. 33.3% [CORRECT]
Rationale: ROE = (Net Income/Sales) × (Sales/Total Assets) × (Total Assets/Total
Equity) = ($500K/$4M) × ($4M/$3M) × ($3M/$1.5M) = 12.5% × 1.333 × 2.0 = 33.3%.
Alternatively, ROE = Net Income/Total Equity = $500,000/$1,500,000 = 33.3%. Option
A uses total assets instead of equity. Option C doubles the equity multiplier. Option
D is only the profit margin. Common retake error: stopping at profit margin or using
wrong denominator.
Correct Answer: B
Q3. A company has total debt of $2,400,000 and total equity of $1,600,000. What is
the debt-to-equity ratio?
A. 0.67
B. 1.50
C. 0.40
D. 2.50
B. 1.50 [CORRECT]
Rationale: Debt-to-equity ratio = Total Debt / Total Equity = $2,400,000 / $1,600,000
= 1.50. This indicates $1.50 of debt for every $1 of equity. Option A inverts the ratio
(equity/debt). Option C is the debt-to-assets ratio ($2.4M/$4.0M = 0.60,
approximated). Option D adds debt and equity in the denominator. Common retake
error: inverting the ratio or using total assets as the denominator.
Correct Answer: B
Q4. A company reports net income of $800,000, interest expense of $200,000, and
taxes of $300,000. What is the times interest earned (TIE) ratio?
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A. 4.0
B. 5.0
C. 6.5
D. 3.0
C. 6.5 [CORRECT]
Rationale: TIE = EBIT / Interest Expense = ($800,000 + $200,000 + $300,000) /
$200,000 = $1,300,000 / $200,000 = 6.5. Option A uses net income/interest
($800K/$200K). Option B uses earnings before taxes ($1.1M/$200K). Option D uses
(NI + Interest)/Interest incorrectly. Common retake error: using net income instead of
EBIT in the numerator.
Correct Answer: C
Q5. A common-size income statement shows the following percentages: COGS 65%,
Operating Expenses 20%, Interest Expense 5%, Taxes 4%. What is the net profit
margin?
A. 6%
B. 10%
C. 15%
D. 26%
A. 6% [CORRECT]
Rationale: Net Profit Margin = 100% - COGS% - Operating Expenses% - Interest% -
Taxes% = 100% - 65% - 20% - 5% - 4% = 6%. Option B subtracts only COGS and
operating expenses (100% - 65% - 20% - 5% = 10%, missing taxes). Option C
subtracts only COGS and operating expenses. Option D is the gross margin. Common
retake error: forgetting to subtract interest and taxes from 100%.
Correct Answer: A
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Q6. A company's total asset turnover decreased from 2.0 to 1.5 while its profit
margin increased from 8% to 10%. Its equity multiplier remained constant at 2.0.
What happened to ROE?
A. ROE increased from 32% to 30%
B. ROE decreased from 32% to 30%
C. ROE remained unchanged at 32%
D. ROE increased from 16% to 20%
B. ROE decreased from 32% to 30% [CORRECT]
Rationale: Original ROE = 8% × 2.0 × 2.0 = 32%. New ROE = 10% × 1.5 × 2.0 = 30%.
Despite higher profit margin, the decline in asset efficiency more than offset the gain,
reducing ROE. Option A reverses the direction. Option C ignores the turnover
decline. Option D uses incorrect formula. Common retake error: assuming higher
profit margin always increases ROE without considering asset turnover.
Correct Answer: B
Q7. A company's accounts receivable turnover is 8.5 times per year. What is the days
sales outstanding (DSO)?
A. 42.9 days
B. 8.5 days
C. 30.4 days
D. 52.9 days
A. 42.9 days [CORRECT]
Rationale: DSO = 365 / Accounts Receivable Turnover = .5 = 42.94 ≈ 42.9
days. Option B confuses turnover with days. Option C uses 365/12 months
incorrectly. Option D uses 365/6.9 incorrectly. Common retake error: forgetting to
divide 365 by turnover or using 360 days without specification.
Correct Answer: A
WGU C214 FINANCIAL MANAGEMENT RETAKE
OBJECTIVE ASSESSMENT 2026/2027 | Latest
Questions & Verified Answers | Remediation Focus |
Pass Guaranteed - A+ Graded
Section 1: Financial Statement Analysis & Ratio Interpretation (Q1-12)
Q1. A company reports current assets of $450,000 and current liabilities of $300,000.
Inventory is $180,000 and prepaid expenses are $20,000. What is the quick ratio?
A. 1.50
B. 0.83
C. 1.17
D. 2.25
B. 0.83 [CORRECT]
Rationale: Quick ratio = (Current Assets - Inventory - Prepaid Expenses) / Current
Liabilities = ($450,000 - $180,000 - $20,000) / $300,000 = $250,000 / $300,000 = 0.83.
Option A is the current ratio ($450K/$300K). Option C subtracts only inventory.
Option D incorrectly adds inventory to liabilities. Common retake error: including
inventory or prepaid expenses in the numerator.
Correct Answer: B
Q2. A company reports net income of $500,000, sales of $4,000,000, total assets of
$3,000,000, and total equity of $1,500,000. What is the return on equity (ROE) using
DuPont analysis?
A. 16.7%
B. 33.3%
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C. 66.7%
D. 12.5%
B. 33.3% [CORRECT]
Rationale: ROE = (Net Income/Sales) × (Sales/Total Assets) × (Total Assets/Total
Equity) = ($500K/$4M) × ($4M/$3M) × ($3M/$1.5M) = 12.5% × 1.333 × 2.0 = 33.3%.
Alternatively, ROE = Net Income/Total Equity = $500,000/$1,500,000 = 33.3%. Option
A uses total assets instead of equity. Option C doubles the equity multiplier. Option
D is only the profit margin. Common retake error: stopping at profit margin or using
wrong denominator.
Correct Answer: B
Q3. A company has total debt of $2,400,000 and total equity of $1,600,000. What is
the debt-to-equity ratio?
A. 0.67
B. 1.50
C. 0.40
D. 2.50
B. 1.50 [CORRECT]
Rationale: Debt-to-equity ratio = Total Debt / Total Equity = $2,400,000 / $1,600,000
= 1.50. This indicates $1.50 of debt for every $1 of equity. Option A inverts the ratio
(equity/debt). Option C is the debt-to-assets ratio ($2.4M/$4.0M = 0.60,
approximated). Option D adds debt and equity in the denominator. Common retake
error: inverting the ratio or using total assets as the denominator.
Correct Answer: B
Q4. A company reports net income of $800,000, interest expense of $200,000, and
taxes of $300,000. What is the times interest earned (TIE) ratio?
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A. 4.0
B. 5.0
C. 6.5
D. 3.0
C. 6.5 [CORRECT]
Rationale: TIE = EBIT / Interest Expense = ($800,000 + $200,000 + $300,000) /
$200,000 = $1,300,000 / $200,000 = 6.5. Option A uses net income/interest
($800K/$200K). Option B uses earnings before taxes ($1.1M/$200K). Option D uses
(NI + Interest)/Interest incorrectly. Common retake error: using net income instead of
EBIT in the numerator.
Correct Answer: C
Q5. A common-size income statement shows the following percentages: COGS 65%,
Operating Expenses 20%, Interest Expense 5%, Taxes 4%. What is the net profit
margin?
A. 6%
B. 10%
C. 15%
D. 26%
A. 6% [CORRECT]
Rationale: Net Profit Margin = 100% - COGS% - Operating Expenses% - Interest% -
Taxes% = 100% - 65% - 20% - 5% - 4% = 6%. Option B subtracts only COGS and
operating expenses (100% - 65% - 20% - 5% = 10%, missing taxes). Option C
subtracts only COGS and operating expenses. Option D is the gross margin. Common
retake error: forgetting to subtract interest and taxes from 100%.
Correct Answer: A
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Q6. A company's total asset turnover decreased from 2.0 to 1.5 while its profit
margin increased from 8% to 10%. Its equity multiplier remained constant at 2.0.
What happened to ROE?
A. ROE increased from 32% to 30%
B. ROE decreased from 32% to 30%
C. ROE remained unchanged at 32%
D. ROE increased from 16% to 20%
B. ROE decreased from 32% to 30% [CORRECT]
Rationale: Original ROE = 8% × 2.0 × 2.0 = 32%. New ROE = 10% × 1.5 × 2.0 = 30%.
Despite higher profit margin, the decline in asset efficiency more than offset the gain,
reducing ROE. Option A reverses the direction. Option C ignores the turnover
decline. Option D uses incorrect formula. Common retake error: assuming higher
profit margin always increases ROE without considering asset turnover.
Correct Answer: B
Q7. A company's accounts receivable turnover is 8.5 times per year. What is the days
sales outstanding (DSO)?
A. 42.9 days
B. 8.5 days
C. 30.4 days
D. 52.9 days
A. 42.9 days [CORRECT]
Rationale: DSO = 365 / Accounts Receivable Turnover = .5 = 42.94 ≈ 42.9
days. Option B confuses turnover with days. Option C uses 365/12 months
incorrectly. Option D uses 365/6.9 incorrectly. Common retake error: forgetting to
divide 365 by turnover or using 360 days without specification.
Correct Answer: A
