WGU C214 OA Financial Management
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Questions and Answers
1. What does the Foreign Corrupt Practices Act forbid U.S.
companies to do?
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further
business deals.
2. What are two basic types of financial instruments?
Stocks and Bonds
3. What are secondary markets?
Secondary financial markets are where securities are traded after the
initial offering.
4. What do cash flows from operating activities report?
Operating – day to day operations
Investing – Property, plant, equipment, long
term items Financing – debt and equity
changes
5. What does the statement of cash flows report?
Cash inflow and cash outflow of business for period of time
6. Write the equation that links the income statement to the balance sheet?
New Re= Old RE + Net Income – dividends
7.
Net income 2,00
0
Depreciation 500
Change in operating assets 400
, Stuvia.com - The Marketplace to Buy and
and Sell your Study
Study Material
Material
Change in PPE 1,00
0
Change on long term 600
liabilities
Dividends paid 100
What is the firm’s cash flow from financing activities? CFF
Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
8. Describe an income statement?
An income statement is a financial statement that shows you how profitable your
business was over a given reporting period. It shows your revenue, minus your
expenses and losses
, Stuvia.com - The Marketplace to Buy and
and Sell your Study
Study Material
Material
9. What item is included in the income statement and not included
in the statement of cash flows.
Depreciation
10. A company sold goods in 2016 for $30,000 and collected the cash in
2017. In 2016, the company incurred and paid $20,000 in expenses
related to the goods sold. How much income should the company report
in 2016 under the accrual basis of accounting?
30,000-20,000= $10,000
11. 11.
EBIT: $1,000,000
Depreciation: $30,000
Changein working
capital($5,000) Net capital
expenditures: $10,000 Tax
rate: 40%
What is the company’s free cash flow?
1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
12. Define Free Cash Flow?
Represents the cash available for the company to repay creditors or pay dividends and
interest to investor
13. A company reported an increase in accounts payable of $4,000
during the recent period. Half of this amount is expected to be paid
next period. What is the impact on the cash flow from operating
activities?
Increase of $4000
14. An architect will receive $10,000 per year (at the end of the year) PMT
for 10 years. The annual interest earned on the investment is 6%. What is
the present value of the architect’s investment?
10,000 PMT (at the end of each
year) 6 I/Y
10 N
CPT PV = -7360008705
15. An employee wants to retire 20 years from today and would like to have
Retake Exam
Questions and Answers
1. What does the Foreign Corrupt Practices Act forbid U.S.
companies to do?
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further
business deals.
2. What are two basic types of financial instruments?
Stocks and Bonds
3. What are secondary markets?
Secondary financial markets are where securities are traded after the
initial offering.
4. What do cash flows from operating activities report?
Operating – day to day operations
Investing – Property, plant, equipment, long
term items Financing – debt and equity
changes
5. What does the statement of cash flows report?
Cash inflow and cash outflow of business for period of time
6. Write the equation that links the income statement to the balance sheet?
New Re= Old RE + Net Income – dividends
7.
Net income 2,00
0
Depreciation 500
Change in operating assets 400
, Stuvia.com - The Marketplace to Buy and
and Sell your Study
Study Material
Material
Change in PPE 1,00
0
Change on long term 600
liabilities
Dividends paid 100
What is the firm’s cash flow from financing activities? CFF
Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
8. Describe an income statement?
An income statement is a financial statement that shows you how profitable your
business was over a given reporting period. It shows your revenue, minus your
expenses and losses
, Stuvia.com - The Marketplace to Buy and
and Sell your Study
Study Material
Material
9. What item is included in the income statement and not included
in the statement of cash flows.
Depreciation
10. A company sold goods in 2016 for $30,000 and collected the cash in
2017. In 2016, the company incurred and paid $20,000 in expenses
related to the goods sold. How much income should the company report
in 2016 under the accrual basis of accounting?
30,000-20,000= $10,000
11. 11.
EBIT: $1,000,000
Depreciation: $30,000
Changein working
capital($5,000) Net capital
expenditures: $10,000 Tax
rate: 40%
What is the company’s free cash flow?
1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
12. Define Free Cash Flow?
Represents the cash available for the company to repay creditors or pay dividends and
interest to investor
13. A company reported an increase in accounts payable of $4,000
during the recent period. Half of this amount is expected to be paid
next period. What is the impact on the cash flow from operating
activities?
Increase of $4000
14. An architect will receive $10,000 per year (at the end of the year) PMT
for 10 years. The annual interest earned on the investment is 6%. What is
the present value of the architect’s investment?
10,000 PMT (at the end of each
year) 6 I/Y
10 N
CPT PV = -7360008705
15. An employee wants to retire 20 years from today and would like to have
