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WGU D775
WGU D775 | Business Finance Assessment
Study Guide PART 2 | Questions & Answers|
Grade A| 100% Correct | (NEW 2025/ 2026)
1. What is corporate social responsibility (CSR)?: The obligation to
contribute positively to society
2. What do market ratios evaluate?: Stock performance
3. What does a low quick ratio indicate about a company's
liquidity?: Reliance on inventory
4. What is the focus of the times interest earned (TIE) ratio?:
Earnings covering debt payments
5. Which ratio might the company look at when evaluating its
efficacy of the cost-cutting program?: Profit margin
6. Which condition would cause a company to have a low average
collection period?: Efficient credit policies
7. Why might the quick ratio be preferred over the current ratio?:
The quick ratio is a more stringent liquidity test.
WGU D775
, 2
WGU D775
8. A financial analyst working in the headquarters of a large
national restaurant chain notices that operating margins have
decreased in one region of the country. What should the analyst
look for in the impacted locations?: Increases in food costs
9. A paint manufacturer recently purchased new computerized
blending equipment for its US manufacturing operations. The
new blending machine has 4 times the capacity of the older
machines it is replacing but costs about the same to purchase
and operate. Which ratio will the manufacture expect to
increase?: Fixed asset turnover ratio
10. A large electronics producer is looking to invest in new
manufacturing equipment to improve efficiency in production.
What should the company assess when making this capital
allocation decision?: The fixed asset turnover ratio to determine
whether current fixed assets are generating sufficient revenue
11. A specialty outdoor retailer with one location is look to add 3
additional stores. Which leverage ratio will the retailer's lender
WGU D775
, 3
WGU D775
analyze before approving debt for the expansion?: Debt-to-equity
ratio
12. How does the price-earnings (P/E) ratio guide enable
investors to make investment decisions?: It allows comparison of
similar firms within an industry.
13. A mid-sized electronics manufacturer is concerned about
the possibility of an economic recession. Which financial strategy
should the company adopt to prepare for the prospect of a
financial downturn?: Increase its cash ratio to ensure it can meet
short-term obligations
14. Why do entrepreneurs often decide to maintain very low
debt-to-equity (D/E) ratios in start-up companies?: Equity is less
risky than debt for the start-up than debt.
15. A bank is evaluating whether to provide a loan to a large
real estate developer. As part of the bank's analysis, it reviews the
developer's financial ratios. Which ratio would the bank most
closely evaluate in this process?: The debt-to-assets ratio
WGU D775
WGU D775
WGU D775 | Business Finance Assessment
Study Guide PART 2 | Questions & Answers|
Grade A| 100% Correct | (NEW 2025/ 2026)
1. What is corporate social responsibility (CSR)?: The obligation to
contribute positively to society
2. What do market ratios evaluate?: Stock performance
3. What does a low quick ratio indicate about a company's
liquidity?: Reliance on inventory
4. What is the focus of the times interest earned (TIE) ratio?:
Earnings covering debt payments
5. Which ratio might the company look at when evaluating its
efficacy of the cost-cutting program?: Profit margin
6. Which condition would cause a company to have a low average
collection period?: Efficient credit policies
7. Why might the quick ratio be preferred over the current ratio?:
The quick ratio is a more stringent liquidity test.
WGU D775
, 2
WGU D775
8. A financial analyst working in the headquarters of a large
national restaurant chain notices that operating margins have
decreased in one region of the country. What should the analyst
look for in the impacted locations?: Increases in food costs
9. A paint manufacturer recently purchased new computerized
blending equipment for its US manufacturing operations. The
new blending machine has 4 times the capacity of the older
machines it is replacing but costs about the same to purchase
and operate. Which ratio will the manufacture expect to
increase?: Fixed asset turnover ratio
10. A large electronics producer is looking to invest in new
manufacturing equipment to improve efficiency in production.
What should the company assess when making this capital
allocation decision?: The fixed asset turnover ratio to determine
whether current fixed assets are generating sufficient revenue
11. A specialty outdoor retailer with one location is look to add 3
additional stores. Which leverage ratio will the retailer's lender
WGU D775
, 3
WGU D775
analyze before approving debt for the expansion?: Debt-to-equity
ratio
12. How does the price-earnings (P/E) ratio guide enable
investors to make investment decisions?: It allows comparison of
similar firms within an industry.
13. A mid-sized electronics manufacturer is concerned about
the possibility of an economic recession. Which financial strategy
should the company adopt to prepare for the prospect of a
financial downturn?: Increase its cash ratio to ensure it can meet
short-term obligations
14. Why do entrepreneurs often decide to maintain very low
debt-to-equity (D/E) ratios in start-up companies?: Equity is less
risky than debt for the start-up than debt.
15. A bank is evaluating whether to provide a loan to a large
real estate developer. As part of the bank's analysis, it reviews the
developer's financial ratios. Which ratio would the bank most
closely evaluate in this process?: The debt-to-assets ratio
WGU D775
