WGU C214 Financial Management OA Study Set

Trading on the NYSE is executed without a specialist (i.e. a market maker). True or False?answer False Stocks and Bonds are two types of financial instruments. True or False?answer True When revenue is matched with cost of sales in an Income statement it is called?answer Matching principle Basic balance sheet equation is what?answer Equity = Assets - Liabilities Why is the balance sheet known as the permanent statement?answer Because the other statements are reset at the end of the fiscal year. How do you calculate the change in retained earnings?answer Net income-dividends Sales - Cost of Sales - other expenses =answer Operating Income or EBiT Name four accounts that are part of total assets?answer Cash, Accounts receivable, inventory, long term assets Name three accounts that are part of total liabilities?answer Bonds, accounts payable and mortgage Name four accounts that are part of current assets?answer Inventory, cash, accounts receivable and short term investments. Name three accounts that are only included in cash flow from financing?answer Common stock, dividends paid and bonds payable Define the statement of cash flows?answer Calculated for the same period of time as the incomes statement is calculated based on the income statement and changes in the balance sheet is one of the three basic accounting statements. When fixed assets increase what happens to cash?answer Cash will decrease What is the purpose of the statement of cash flows?answer Explains the change in cash over the course of the specified time frame. Suppose the inventory turnover of a company is higher than the industry. Based on this observation, which of the following is most likely?answer The firm has too little inventory resulting in lost sales or stock-outs.If a company wishes to obtain a bank loan, will it want to have a higher current ratio or a lower current ratio?answer Higher The Operating Income Return on Investment (OIROI) uses what elements on the income statement?answer EBIT and total assets Why would a company be interested in the Total Asset Turnover (TAT) ratio?answer To see how efficient are at producing sales What annual interest will be paid for a zero coupon bond?answer 0% What is the most significant characteristic of subordinated debt?answer Senior debt is paid off first