WGU C214 Financial Management OA Prep Test Bank 2 with 350 Questions and Correct Verified Answers/ C214 Latest OA and PA Prep Test Bank / C214 Objective Assessment

WGU C214 Financial Management OA Prep Test
Bank 2 with 350 Questions and Correct Verified
Answers/ C214 Latest OA and PA Prep Test Bank
2026-2027/ C214 Objective Assessment


1. The goal of the corporation is to:
a. Maximize profits
b. Maximize the stock price
c. Maximize market share
d. Minimize risk - ANSWER-b- Maximize the stock price


2. Which of the following is not a requirement for an efficient market
a. Competitive market
b. Well-managed firms
c. Transparency
d. Liquidity - ANSWER-b. Well-managed firms


3. What is the relationship between risk and required return?
a. The two are independent
b. Higher required return causes lower risk
c. Higher risk causes higher required return
d. None of the above - ANSWER-c. Higher risk causes higher required return


4. The value of money depends upon

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,a. The timing of the receipt
b. The certainty of receipt
c. Riskiness of receipt
d. All of the above - ANSWER-d. All of the above


5. What is the purpose of the SEC 10-K filing requirement?
a. Prevent insider trading
b. Promote transparency and market efficiency
c. Regulate securities sales practices
d. Prevent monopolies - ANSWER-b. Promote transparency and market efficiency


6. Which line item is not part of net working capital?
a. Inventory
b. Bonds
c. Accounts Payable
d. Accrued expenses - ANSWER-b. Bonds


7. Which action causes a cash outflow?
a. Increase in accounts payable
b. Decrease in accounts receivable
c. Increase in inventory
d. None of the above - ANSWER-c. Increase in inventory


8. Which of the following is correct?
a. Gross PPE equals Net PPE plus depreciation expense


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,b. Gross PPE equals Net PPE plus accumulated depreciation
c. Net PPE equals Gross PPE plus depreciation expense
d. None of the above - ANSWER-b. Gross PPE equals Net PPE plus accumulated
depreciation


9. Net Margin is defined as:
a. EBIT divided by sales
b. Net Income divided by sales
c. Dividends divided by net income
d. Retained earnings divided by sales. - ANSWER-b. Net Income divided by sales


10. Which item is transferred from the income statement to the balance sheet?
a. Depreciation expense
b. Dividends paid
c. Addition to retained earnings
d. Both a and c - ANSWER-d. Both a and c


11. What item is added to net income to calculate net cash flow?
a. Taxes
b. Depreciation expense
c. Dividends paid
d. None of the above - ANSWER-b. Depreciation expense


12. Which cash flow statement represents cash earned by producing and selling the
product
a. Cash flow operations

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, b. Cash flow financing
c. Cash flow investing
d. None of the above - ANSWER-a. Cash flow operations


13. Which ratio reflects a firm's reliance on debt financing?
a. Quick ratio
b. Net Margin
c. Financial leverage
d. Asset turnover - ANSWER-c. Financial leverage


14. If two firms use different inventory valuation methods, it is called:
a. Timing issue
b. Seasonal effect
c. Accounting difference
d. Cross industry effect - ANSWER-c. Accounting difference


15. What affects the required return on a security?
a. Perceived riskiness of the security
b. Financial decisions of the firm
c. Trading in financial markets
d. All of the above - ANSWER-d. All of the above


16. Which is the most frequent type of transaction in financial markets?
a. IPO's
b. Secondary market trades


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