WGU D775 Business Finance Study Guide with
Complete Solution | Latest 2026/27 Update
lOMoAR cPSD| 6861666
D775 Business Finance – Simple Study Guide
1. Foundations of Finance
Finance = managing money (earning, saving, borrowing, investing, spending).
Types of Finance: Personal, Public, Business
Markets: Primary = company sells new stocks/bonds. Secondary = investors trade.
Instruments: Stocks = ownership, Bonds = loans, Derivatives = contracts.
2. Financial Ratios
Ratios = shortcuts to check company health.
Category Example Good/Bad
Liquidity Current Ratio = Current Assets ÷ Current Liabilities Higher is better
Leverage Debt-to-Assets Ratio = Total Debt ÷ Total Assets Lower is better
Profitability ROE = Net Income ÷ Equity Higher is better
Market P/E Ratio = Price ÷ Earnings Shows stock price vs earnings
How to fix ratios:
- Increase current ratio → pay off liabilities or add current assets.
- Decrease debt-to-assets → pay debt or issue equity.
- Increase ROE → increase profit, reduce shares, or use leverage wisely.
3. Time Value of Money (TVM)
A dollar today is worth more than tomorrow (risk, preference, inflation).
Formulas:
Future Value (FV) = PV × (1 + r)^n
Present Value (PV) = FV ÷ (1 + r)^n
Example: $100 at 5% for 2 years → FV = 100 × (1.05)^2 = $110.25
4. Capital Budgeting & Cost of Capital
Cost of Capital = cost of debt + cost of equity.
Decision Rules:
- NPV > 0 → Accept project
Complete Solution | Latest 2026/27 Update
lOMoAR cPSD| 6861666
D775 Business Finance – Simple Study Guide
1. Foundations of Finance
Finance = managing money (earning, saving, borrowing, investing, spending).
Types of Finance: Personal, Public, Business
Markets: Primary = company sells new stocks/bonds. Secondary = investors trade.
Instruments: Stocks = ownership, Bonds = loans, Derivatives = contracts.
2. Financial Ratios
Ratios = shortcuts to check company health.
Category Example Good/Bad
Liquidity Current Ratio = Current Assets ÷ Current Liabilities Higher is better
Leverage Debt-to-Assets Ratio = Total Debt ÷ Total Assets Lower is better
Profitability ROE = Net Income ÷ Equity Higher is better
Market P/E Ratio = Price ÷ Earnings Shows stock price vs earnings
How to fix ratios:
- Increase current ratio → pay off liabilities or add current assets.
- Decrease debt-to-assets → pay debt or issue equity.
- Increase ROE → increase profit, reduce shares, or use leverage wisely.
3. Time Value of Money (TVM)
A dollar today is worth more than tomorrow (risk, preference, inflation).
Formulas:
Future Value (FV) = PV × (1 + r)^n
Present Value (PV) = FV ÷ (1 + r)^n
Example: $100 at 5% for 2 years → FV = 100 × (1.05)^2 = $110.25
4. Capital Budgeting & Cost of Capital
Cost of Capital = cost of debt + cost of equity.
Decision Rules:
- NPV > 0 → Accept project
