WGU D775 INTRO TO BUSINESS FINANCE
COMPREHENSIVE EXAM QUESTIONS AND
SOLUTIONS
◉ Times interest earned ratio
Answer: Which ratio reflects an ability to pay interest on debt as it
becomes due?
◉ Fixed asset turnover vs return on assets
Answer: What is the primary difference between fixed asset
turnover and return on assets?
◉ Return on equity
Answer: Which ratio identifies the profitability relative to equity?
◉ Firm with low profit margins
Answer: A business that operates with minimal profit relative to
its sales.
◉ Firm providing mostly services
Answer: A company that primarily offers services rather than
physical products.
◉ Firm with high debt
, Answer: A business that has a significant amount of borrowed
money compared to its equity.
◉ Firm with high inventory
Answer: A company that maintains a large amount of stock in its
warehouses or stores.
◉ Inventory turnover ratio
Answer: A measure of how efficiently a company sells and
replaces its stock of goods.
◉ Goal of increasing inventory turnover
Answer: The target of raising the inventory turnover ratio from
below 3 to 5.
◉ High quick ratio during economic downturn
Answer: Indicates the company can cover obligations without
selling inventory.
◉ Debt-to-assets ratio
Answer: A financial ratio that indicates the proportion of a
company's assets that are financed by debt.
◉ Time-interest earned ratio
COMPREHENSIVE EXAM QUESTIONS AND
SOLUTIONS
◉ Times interest earned ratio
Answer: Which ratio reflects an ability to pay interest on debt as it
becomes due?
◉ Fixed asset turnover vs return on assets
Answer: What is the primary difference between fixed asset
turnover and return on assets?
◉ Return on equity
Answer: Which ratio identifies the profitability relative to equity?
◉ Firm with low profit margins
Answer: A business that operates with minimal profit relative to
its sales.
◉ Firm providing mostly services
Answer: A company that primarily offers services rather than
physical products.
◉ Firm with high debt
, Answer: A business that has a significant amount of borrowed
money compared to its equity.
◉ Firm with high inventory
Answer: A company that maintains a large amount of stock in its
warehouses or stores.
◉ Inventory turnover ratio
Answer: A measure of how efficiently a company sells and
replaces its stock of goods.
◉ Goal of increasing inventory turnover
Answer: The target of raising the inventory turnover ratio from
below 3 to 5.
◉ High quick ratio during economic downturn
Answer: Indicates the company can cover obligations without
selling inventory.
◉ Debt-to-assets ratio
Answer: A financial ratio that indicates the proportion of a
company's assets that are financed by debt.
◉ Time-interest earned ratio
