WGU C214 FINANCIAL MANAGEMENT OA
STUDY SET
When a company uses more leverage as evidenced by a higher degree of either
financial or operating leverage, what effect does it have on changes in
profitability? - ANSWER-Higher leverage leads to higher profitability for a given
sale level.
What does the degree of financial leverage indicate? - ANSWER-The reliance on
debt
If a company has a high degree of financial leverage, what does that tell us about
the firms risk profile? - ANSWER-Financial leverage also means that more
financing is done through debt, not equity. Higher profits to shareholders.
What is the cash cycle? - ANSWER-The amount of time to regenerate cash.
Why is float important to understand? - ANSWER-To time cash expenditures
What should a company do to manage its working capital? - ANSWER-Collect
quickly and pay slowly
Name what characterizes increased collection float? - ANSWER-Increased float
indicates slower processing time.
,In regards to Accounts Payable Balances, what is a good policy? - ANSWER-Paying
off A/P on the last day due is a good policy.
What would be a good source of information to determine replacement cost? -
ANSWER-Building Appraisal
Dodd-Frank Act regulates which segment of the U.S economy? - ANSWER-Banking
industry
What is the regulatory body that overseas the systematic risk in banking? -
ANSWER-Financial stability oversight council
The SEC securities and Exchange Commission requires companies to do the
following three things: - ANSWER-Register all public offerings, regulate stock sales
and ensure transparency through uniform reporting.
What does the Sarbanes-Oxley Act require companies to do? - ANSWER-Have
internal control audits, senior management responsible for signing off on
statements and places restrictions on auditors.
Financial Industry Regulatory Authority (FINRA) does the following? - ANSWER-
Licenses stock brokers and audits brokerage firms.
If a product is made 100% domestically, what can affect its domestic market? -
ANSWER-International competition
, If a company makes a product in a foreign country where labor costs are much
lower, what happens? - ANSWER-Profits go up and domestic employment
decreases.
If the value of a dollar increases, the price of imports does what? - ANSWER-
Decreases
Why would a farmer buy a hedge when he signs a contract to sell products
oversees? - ANSWER-To reduce currency risk
The goal of a corporation is to? - ANSWER-Minimize risk
Which of the following is not a requirement for an efficient market? - ANSWER-
Liquidity
The value of money depends upon? - ANSWER-The timing of receipts, certainty of
receipt and riskiness of receipt.
What is the purpose of the SEC 10-K filing? - ANSWER-Prevent monopolies
Which line item is not part of net working capital? - ANSWER-Bonds
Increase in accounts payable, decrease in accounts payable and increase in
inventory are examples of cash flow. True/False - ANSWER-False
STUDY SET
When a company uses more leverage as evidenced by a higher degree of either
financial or operating leverage, what effect does it have on changes in
profitability? - ANSWER-Higher leverage leads to higher profitability for a given
sale level.
What does the degree of financial leverage indicate? - ANSWER-The reliance on
debt
If a company has a high degree of financial leverage, what does that tell us about
the firms risk profile? - ANSWER-Financial leverage also means that more
financing is done through debt, not equity. Higher profits to shareholders.
What is the cash cycle? - ANSWER-The amount of time to regenerate cash.
Why is float important to understand? - ANSWER-To time cash expenditures
What should a company do to manage its working capital? - ANSWER-Collect
quickly and pay slowly
Name what characterizes increased collection float? - ANSWER-Increased float
indicates slower processing time.
,In regards to Accounts Payable Balances, what is a good policy? - ANSWER-Paying
off A/P on the last day due is a good policy.
What would be a good source of information to determine replacement cost? -
ANSWER-Building Appraisal
Dodd-Frank Act regulates which segment of the U.S economy? - ANSWER-Banking
industry
What is the regulatory body that overseas the systematic risk in banking? -
ANSWER-Financial stability oversight council
The SEC securities and Exchange Commission requires companies to do the
following three things: - ANSWER-Register all public offerings, regulate stock sales
and ensure transparency through uniform reporting.
What does the Sarbanes-Oxley Act require companies to do? - ANSWER-Have
internal control audits, senior management responsible for signing off on
statements and places restrictions on auditors.
Financial Industry Regulatory Authority (FINRA) does the following? - ANSWER-
Licenses stock brokers and audits brokerage firms.
If a product is made 100% domestically, what can affect its domestic market? -
ANSWER-International competition
, If a company makes a product in a foreign country where labor costs are much
lower, what happens? - ANSWER-Profits go up and domestic employment
decreases.
If the value of a dollar increases, the price of imports does what? - ANSWER-
Decreases
Why would a farmer buy a hedge when he signs a contract to sell products
oversees? - ANSWER-To reduce currency risk
The goal of a corporation is to? - ANSWER-Minimize risk
Which of the following is not a requirement for an efficient market? - ANSWER-
Liquidity
The value of money depends upon? - ANSWER-The timing of receipts, certainty of
receipt and riskiness of receipt.
What is the purpose of the SEC 10-K filing? - ANSWER-Prevent monopolies
Which line item is not part of net working capital? - ANSWER-Bonds
Increase in accounts payable, decrease in accounts payable and increase in
inventory are examples of cash flow. True/False - ANSWER-False
