WGU D775 INTRO TO BUSINESS FINANCE EXAMINATION TEST COMPLETE SOLVED QUESTIONS

WGU D775 INTRO TO BUSINESS FINANCE
EXAMINATION TEST COMPLETE SOLVED
QUESTIONS

◉ Net profit margin
Answer: Net Income / Sales; 'cents kept' from each dollar of sales.


◉ Return on assets (ROA)
Answer: Net Income / Average Total Assets; profit generated per
dollar of assets.


◉ Return on equity (ROE)
Answer: Net Income / Average Equity; return earned for
owners/shareholders.


◉ Book value
Answer: Accounting value (Assets − Liabilities = Equity); based on
historical costs.


◉ Market value
Answer: What investors are willing to pay today; reflects
expectations, risk, and growth prospects.


◉ Earnings per share (EPS)

, Answer: (Net Income − Preferred Dividends) / Weighted Average
Shares Outstanding.


◉ Price-to-earnings (P/E) ratio
Answer: Market Price per Share / EPS; how much investors pay
for $1 of earnings.


◉ Time value of money (TVM)
Answer: $1 today is worth more than $1 tomorrow due to risk,
opportunity cost, and inflation.


◉ Compounding
Answer: Moving money forward in time (PV → FV) by earning
interest on interest.


◉ Discounting
Answer: Moving money backward in time (FV → PV) using a
discount rate.


◉ Annuity
Answer: A series of equal payments at regular intervals (e.g.,
mortgage, car payments).


◉ Capital budgeting