WGU D775 - SECTION 2 EXAM GRADED A+
1. Financial models are used to: 1. assess finanical health of the firm
(diagnosis)
2. forecast the financial health of hte firm (prognosis)
3. identify changes to improve the financial health of the firm (treatment)
2. liquidity ratios: measure a company's ability to meet its short-term financial
obligations using its most liquid assets
3. High liquidity ratios indicate: strong capacity to cover short-term
debts, enhancing the firm's creditworthiness and financial stability
4. Low liquidity ratios indicate: a company may have a problem with
paying its bills.
5. activity ratios - aka efficiency ratios: evaluate how eflciently a firm
utilizes its assets to generate sales or revenue.
provide insights into the operational performance of the company, indicating how
well it manages its overall asset base.
6. activity ratios - aka efficiency ratios: provide insights into the
operational performance of the
,company, indicating how well it manages its overall asset base.
7. leverage ratios: measure the extent to which a firm uses debt to finance its
operations and growth
8. leverage ratios: highlight the company's structure or mixture of debt and
equity—which is called "capital structure"—and its reliance on external
funding
9. higher leverage ratios may indicate: greater financial risk, as the
company might struggle to meet its debt obligations during economic
downturns
10. moderate leverage ratio can: enhance returns on equity when
managed properly
11. profitability ratios: assess a company's ability to generate earnings
relative to its revenue, assets, or equity.
12. profitability ratios: provide an indication of the firm's capacity to produce
profits.
13. higher profitability ratios typically suggest: a well-managed
company with ettective cost control and strong revenue-generating
capabilities
14. market ratios: analyze a company's financial performance in relation to its
stock price
15. market ratios: provide insights into investor perceptions and market
valuation of the firm. They help in understanding how the market values the
company's earnings, growth prospects, and risk profile
16. Favorable market ratios generally reflect: positive investor
sentiment and confidence in the company's future performance
, Unfavorable market ratios sometimes indicate: a company
17.
might be overvalued by market participants.
18. cross-sectional analysis.: Comparing the financial ratios of one company to
the same financial ratios of another company.
19. time-series analysis: Comparing a financial ratio across time.
20. How do you conduct cross-sectional analysis using
financial ratios?: By com-paring the financial ratios of one company to
the same financial ratios of another company
21. How do you conduct time-series analysis using financial
ratios?: By comparing a particular financial ratio for a company across
time
22. financial statements: documents that provide a comprehensive snapshot of
a company's performance and operational eflciency
23. balance sheet: presents a company's financial position at a
specific point in time. Assets = Liabilities + Shareholders' Equity.
24. assets: Resources owned by a company with economic value.
25. current assets: cash, inventories, receivables
26. fixed assets: property, plant and equipment
27. liabilities: Obligations or debts owed by a business.
28. current liabilities: due within one year
29. long-term liabilities: due after one year
30. shareholders equity: Owner's claim on assets after
liabilities are settled. includes paid-in capital, retained
1. Financial models are used to: 1. assess finanical health of the firm
(diagnosis)
2. forecast the financial health of hte firm (prognosis)
3. identify changes to improve the financial health of the firm (treatment)
2. liquidity ratios: measure a company's ability to meet its short-term financial
obligations using its most liquid assets
3. High liquidity ratios indicate: strong capacity to cover short-term
debts, enhancing the firm's creditworthiness and financial stability
4. Low liquidity ratios indicate: a company may have a problem with
paying its bills.
5. activity ratios - aka efficiency ratios: evaluate how eflciently a firm
utilizes its assets to generate sales or revenue.
provide insights into the operational performance of the company, indicating how
well it manages its overall asset base.
6. activity ratios - aka efficiency ratios: provide insights into the
operational performance of the
,company, indicating how well it manages its overall asset base.
7. leverage ratios: measure the extent to which a firm uses debt to finance its
operations and growth
8. leverage ratios: highlight the company's structure or mixture of debt and
equity—which is called "capital structure"—and its reliance on external
funding
9. higher leverage ratios may indicate: greater financial risk, as the
company might struggle to meet its debt obligations during economic
downturns
10. moderate leverage ratio can: enhance returns on equity when
managed properly
11. profitability ratios: assess a company's ability to generate earnings
relative to its revenue, assets, or equity.
12. profitability ratios: provide an indication of the firm's capacity to produce
profits.
13. higher profitability ratios typically suggest: a well-managed
company with ettective cost control and strong revenue-generating
capabilities
14. market ratios: analyze a company's financial performance in relation to its
stock price
15. market ratios: provide insights into investor perceptions and market
valuation of the firm. They help in understanding how the market values the
company's earnings, growth prospects, and risk profile
16. Favorable market ratios generally reflect: positive investor
sentiment and confidence in the company's future performance
, Unfavorable market ratios sometimes indicate: a company
17.
might be overvalued by market participants.
18. cross-sectional analysis.: Comparing the financial ratios of one company to
the same financial ratios of another company.
19. time-series analysis: Comparing a financial ratio across time.
20. How do you conduct cross-sectional analysis using
financial ratios?: By com-paring the financial ratios of one company to
the same financial ratios of another company
21. How do you conduct time-series analysis using financial
ratios?: By comparing a particular financial ratio for a company across
time
22. financial statements: documents that provide a comprehensive snapshot of
a company's performance and operational eflciency
23. balance sheet: presents a company's financial position at a
specific point in time. Assets = Liabilities + Shareholders' Equity.
24. assets: Resources owned by a company with economic value.
25. current assets: cash, inventories, receivables
26. fixed assets: property, plant and equipment
27. liabilities: Obligations or debts owed by a business.
28. current liabilities: due within one year
29. long-term liabilities: due after one year
30. shareholders equity: Owner's claim on assets after
liabilities are settled. includes paid-in capital, retained
