WGU D076 Objective Assessment Final Exam 2 Versions Updated 2025 Comprehensive Questions and
Answers
WGU D076 Objective Assessment Final Exam 2 Versions Updated
2025 Comprehensive Questions and Answers
What is the name for a forecast of short-term events that helps a company understand if it has
sufficient cash? - ✔✔✔ Correct Answer
> Cash budget - A cash budget is a short-term forecast of future events that helps a company
understand whether it has sufficient cash for regular operations.
Why are ratios useful for analyzing and comparing company performance between firms of
different sizes? - ✔✔✔ Correct Answer > They provide standardization. - Ratios standardize
financial data to make them comparable across firms, even those of distinctly different sizes.
What is the purpose of a monthly cash budget? - ✔✔✔ Correct Answer > To control cash
inflows and outflows so you can balance income with expenditures and savings - Controlling
cash inflows and
outflows allows you to use your money in the most effective way possible.
You are the financial manager of a firm. The firm is small and is struggling to collect cash from
accounts receivable. Also, due to the nature of industry, inventories are illiquid. To make sure
that the firm has enough cash holdings for short-term obligations, you decide to create a new
ratio of cash to short-term obligations. What is this scenario an example of? - ✔✔✔ Correct
Answer > Flexibility –
,WGU D076 Objective Assessment Final Exam 2 Versions Updated 2025 Comprehensive Questions and
Answers
How do the benefits of knowing the cash position for each period differ between businesses
and individuals? - ✔✔✔ Correct Answer > Knowing the cash position allows businesses to
recognize when short- term loans are needed, while it allows individuals to analyze progress
toward their personal financial goals.
What is the difference between tracking and monitoring cash flows? -
✔✔✔ Correct Answer > Monitoring involves using your tracking record to evaluate cash flows
against your target, identify patterns and changes in cash flows, and gauge when correction is
needed. - By accessing cash flow records and knowing the remaining balance in the budget
throughout the month and year, you will be able to monitor your budget in a way that will help
you reach your financial goals.
Why are activity ratios also called efficiency ratios or asset use efficiency ratios? - ✔✔✔ Correct
Answer > Because they measure how well a company uses its assets to generate sales or cash.
What type of ratio is used to consider how a firm is financed and to assess a firm's ability to pay
interest and pay back long-term obligations? - ✔✔✔ Correct Answer > Financing ratios -
Financing ratios consider how a firm is financed.
What does a net margin of 7% indicate? - ✔✔✔ Correct Answer > For every dollar of revenue, 7
cents remain for the equity holders after all other costs are covered -
Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can
the firm do in order to be competitive with accounts receivable management in the industry? -
✔✔✔ Correct Answer > Tighten the credit standards for its customers. - The credit standards
are too loose, so the customers are not paying Firm A as quickly as they are paying other
competitors in the industry. Tightening the credit standards would shorten the average
collection period.
What is the difference between the current ratio and the quick ratio? -
, WGU D076 Objective Assessment Final Exam 2 Versions Updated 2025 Comprehensive Questions and
Answers
✔✔✔ Correct Answer > Inventory is excluded in the calculation of the quick ratio. - Since
inventory is the least liquid current asset, inventory is not included in the calculation.
Which term is used to describe the stock of a firm with market-to-book ratio of less than 1? -
✔✔✔ Correct Answer > Value stock - An M/B ratio of less than 1 is considered a value stock.
What does inventory turnover assess? - ✔✔✔ Correct Answer > The inventory management of
a firm -
You are comparing the return on equity of Firm 1 and Firm 2. Both firms have an identical profit
margin and asset turnover, but Firm 1 has an overall higher return on equity. What must be
true? - ✔✔✔ Correct Answer > Firm 1 is using a higher proportion of debt to finance its
operations. - The third component of return on equity is the leverage multiplier. Since the firms'
profit margins and asset turnovers are the same, it must be the leverage multiplier that is
different. Using a higher amount of debt would result in a larger leverage multiplier and an
overall higher return on equity.
W&H Company wants to create a cash budget to better manage its cash flows. The financial
manager knows that the firm's labor costs and materials costs are too high for the level of sales
each month. The firm also needs to keep better track of its cash flows to assess its need for
additional financing through short-term loans.
W&H Inc.'s labor costs each month are an example of which item in a cash budget? - ✔✔✔
Correct Answer > Cash disbursement - This is a cash disbursement for the firm because it
represents cash going out during the month to pay employees.
W&H Company wants to create a cash budget to better manage its cash flows. The financial
manager knows that the firm's labor costs and materials costs are too high for the level of sales
each month. The firm
also needs to keep better track of its cash flows to assess its need for additional financing
through short-term loans.
Answers
WGU D076 Objective Assessment Final Exam 2 Versions Updated
2025 Comprehensive Questions and Answers
What is the name for a forecast of short-term events that helps a company understand if it has
sufficient cash? - ✔✔✔ Correct Answer
> Cash budget - A cash budget is a short-term forecast of future events that helps a company
understand whether it has sufficient cash for regular operations.
Why are ratios useful for analyzing and comparing company performance between firms of
different sizes? - ✔✔✔ Correct Answer > They provide standardization. - Ratios standardize
financial data to make them comparable across firms, even those of distinctly different sizes.
What is the purpose of a monthly cash budget? - ✔✔✔ Correct Answer > To control cash
inflows and outflows so you can balance income with expenditures and savings - Controlling
cash inflows and
outflows allows you to use your money in the most effective way possible.
You are the financial manager of a firm. The firm is small and is struggling to collect cash from
accounts receivable. Also, due to the nature of industry, inventories are illiquid. To make sure
that the firm has enough cash holdings for short-term obligations, you decide to create a new
ratio of cash to short-term obligations. What is this scenario an example of? - ✔✔✔ Correct
Answer > Flexibility –
,WGU D076 Objective Assessment Final Exam 2 Versions Updated 2025 Comprehensive Questions and
Answers
How do the benefits of knowing the cash position for each period differ between businesses
and individuals? - ✔✔✔ Correct Answer > Knowing the cash position allows businesses to
recognize when short- term loans are needed, while it allows individuals to analyze progress
toward their personal financial goals.
What is the difference between tracking and monitoring cash flows? -
✔✔✔ Correct Answer > Monitoring involves using your tracking record to evaluate cash flows
against your target, identify patterns and changes in cash flows, and gauge when correction is
needed. - By accessing cash flow records and knowing the remaining balance in the budget
throughout the month and year, you will be able to monitor your budget in a way that will help
you reach your financial goals.
Why are activity ratios also called efficiency ratios or asset use efficiency ratios? - ✔✔✔ Correct
Answer > Because they measure how well a company uses its assets to generate sales or cash.
What type of ratio is used to consider how a firm is financed and to assess a firm's ability to pay
interest and pay back long-term obligations? - ✔✔✔ Correct Answer > Financing ratios -
Financing ratios consider how a firm is financed.
What does a net margin of 7% indicate? - ✔✔✔ Correct Answer > For every dollar of revenue, 7
cents remain for the equity holders after all other costs are covered -
Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can
the firm do in order to be competitive with accounts receivable management in the industry? -
✔✔✔ Correct Answer > Tighten the credit standards for its customers. - The credit standards
are too loose, so the customers are not paying Firm A as quickly as they are paying other
competitors in the industry. Tightening the credit standards would shorten the average
collection period.
What is the difference between the current ratio and the quick ratio? -
, WGU D076 Objective Assessment Final Exam 2 Versions Updated 2025 Comprehensive Questions and
Answers
✔✔✔ Correct Answer > Inventory is excluded in the calculation of the quick ratio. - Since
inventory is the least liquid current asset, inventory is not included in the calculation.
Which term is used to describe the stock of a firm with market-to-book ratio of less than 1? -
✔✔✔ Correct Answer > Value stock - An M/B ratio of less than 1 is considered a value stock.
What does inventory turnover assess? - ✔✔✔ Correct Answer > The inventory management of
a firm -
You are comparing the return on equity of Firm 1 and Firm 2. Both firms have an identical profit
margin and asset turnover, but Firm 1 has an overall higher return on equity. What must be
true? - ✔✔✔ Correct Answer > Firm 1 is using a higher proportion of debt to finance its
operations. - The third component of return on equity is the leverage multiplier. Since the firms'
profit margins and asset turnovers are the same, it must be the leverage multiplier that is
different. Using a higher amount of debt would result in a larger leverage multiplier and an
overall higher return on equity.
W&H Company wants to create a cash budget to better manage its cash flows. The financial
manager knows that the firm's labor costs and materials costs are too high for the level of sales
each month. The firm also needs to keep better track of its cash flows to assess its need for
additional financing through short-term loans.
W&H Inc.'s labor costs each month are an example of which item in a cash budget? - ✔✔✔
Correct Answer > Cash disbursement - This is a cash disbursement for the firm because it
represents cash going out during the month to pay employees.
W&H Company wants to create a cash budget to better manage its cash flows. The financial
manager knows that the firm's labor costs and materials costs are too high for the level of sales
each month. The firm
also needs to keep better track of its cash flows to assess its need for additional financing
through short-term loans.
