WGU C214 Financial Management PA/ Financial
Management (C214) - PA C214 Financial Management,
WGU Pre Assessment 2 SETS COMPLIED WITH
COMPLETE SOLUTION NEW!!
Pruhart Tch as an innova ve app-based trading pla orm and expects its growth to boom in the
next few years. Before the company goes public, it wants to show a strong history of profit and
is focusing its efforts on improving its bo"om line (on the income statement).
What is a poten al nega ve consequence if the firm focuses solely on profit maximiza on?
Unethical behavior and poten al scandals
3 mul)ple choice op)ons
How might a privately help company define shareholder value differently from a publicly held
company?
Privately help companies may value keeping the business within the family.
3 mul)ple choice op)ons
What effect does a currency devalua on have on a country's interna onal trade?
It mikes a country's exports cheaper interna onally.
3 mul)ple choice op)ons
How does global financing integra on benefit corpora ons?
It provides access to a wider range of funding sources and investment opportuni es.
3 mul)ple choice op)ons
What is an auc on market in secondary financial markets?
A market that operates where prices are determined by the highest bidder.
3 mul)ple choice op)ons
Why are efficient, well-developed financial markets important for stock pricing?
,They produce more reliable stock prices.
3 mul)ple choice op)ons
Talia is considering purchasing a small, local construc on company. When reviewing the
financials, she no ces that although the company produced $200,000 in net income during the
last year, the retained earnings increased by only $50,000.
Which scenario would explain why the change in retained earnings from the previous year did
not increase by the total income earned?
The remaining earnings were paid out as dividends to shareholders.
3 mul)ple choice op)ons
What does Retained Earnings represent in the equity sec on of the balance sheet?
The cumula ve total of earnings not paid out as dividends to stockholders.
3 mul)ple choice op)ons
In the statement of cash flows, why is deprecia on expense added back to net income when
calcula ng cash frows from opera ons (CFO)?
Because it is a non-cash expense.
3 mul)ple choice op)ons
An investor is considering pu:ng money into a start-up company. They ask for the company's
projected statement of cash flows for the next period.
How will this help the investor evaluate the start-up's projected performance?
it will show the cash flows the firm expects from opera ng, inves ng, and financing ac vi es.
3 mul)ple choice op)ons
The statement of cash flows for Quiet Flag Industries is provided below. CFO indicates cash flow
from opera ons, CFI indicates cash flow from inves ng, and CFF indicates cash flow from
financing.
What can be concluded about the firm's cash flows during the year?
The company relied heavily on external financing for cash during the year.
3 mul)ple choice op)ons
In the statement of cash flows, when using the indirect method of calcula ng cash flow from
opera ons (CFO), how is an increase in opera ng asset accounts (other than cash) treated?
,It is subtracted from net income.
3 mul)ple choice op)ons
Why is scrubbing the data crucial when comparing a company with its peers through ra o
analysis?
To adjust for differences in fiscal year-ends and accoun ng prac ces among companies
3 mul)ple choice op)ons
Which difficulty may arise when performing ra o analysis for seasonal businesses?
Seasonal varia ons make it challenging to compare ra os across firms if the repor ng dates of
the company's financial statements are different.
3 mul)ple choice op)ons
Use Freedom Rock Bicycles' financial statements for 20X3 below to answer the following
ques on.
What was Freedom Rock Bicycles' total asset turnover ra o for the year?
2.50
3 mul)ple choice op)ons
Use Rusty RoboTech's financial statements for 20X3 below to answer the following ques on.
What is Rusty RoboTech's profit margin for the year?
40%
3 mul)ple choice op)ons
What informa on does the return on equity (ROE) ra on provide?
It indicates the earnings generated for each dollar of equity invested.
3 mul)ple choice op)ons
Which factor is an example of an external risk that should be considered in an integrated
financial analysis of a firm?
Changes in compe ve forces due to economic turndown
3 mul)ple choice op)ons
What is the primary characteris c of the cash flow pa"ern for a typical corporate bond?
A stream of annual or semiannual interest payments and a final principal repayment
, 3 mul)ple choice op)ons
How is the number of periods (n) calculated for a bond paying semiannual coupons?
It is mul plied by 2.
3 mul)ple choice op)ons
In the case of bankruptcy, what represents a primary difference in the claim hierarchy between
common and preferred stockholders?
Preferred stockholders have a higher claim on company assets in case of liquida on.
3 mul)ple choice op)ons
What is a key advantage of holding common stock over preferred stock?
Poten al for capital apprecia on.
3 mul)ple choice op)ons
What is the book value per share if a company's total equity is $200 million and it has 20 million
shares outstanding?
$10
3 mul)ple choice op)ons
A company with a market capitaliza on of $500 million has net income of $25 million.
What is the company's earnings per share (EPS) if it has 10 million shares outstanding?
$2.50
3 mul)ple choice op)ons
A company is expected to pay a dividend of $1.80 next year, which is expected to grow at a rate
of 7% per year indefinitely. The required rate of return on the company's stock is 11%.
What is the value of the stock using the Gordon growth model?
$45.00
3 mul)ple choice op)ons
A company's stock is currently paying a dividend of $4.00. The dividends are expected to grow
at 3% annually, and the required rate of return is 11%.
What is the value of the stock using the Gordon growth model?
$51.50
Management (C214) - PA C214 Financial Management,
WGU Pre Assessment 2 SETS COMPLIED WITH
COMPLETE SOLUTION NEW!!
Pruhart Tch as an innova ve app-based trading pla orm and expects its growth to boom in the
next few years. Before the company goes public, it wants to show a strong history of profit and
is focusing its efforts on improving its bo"om line (on the income statement).
What is a poten al nega ve consequence if the firm focuses solely on profit maximiza on?
Unethical behavior and poten al scandals
3 mul)ple choice op)ons
How might a privately help company define shareholder value differently from a publicly held
company?
Privately help companies may value keeping the business within the family.
3 mul)ple choice op)ons
What effect does a currency devalua on have on a country's interna onal trade?
It mikes a country's exports cheaper interna onally.
3 mul)ple choice op)ons
How does global financing integra on benefit corpora ons?
It provides access to a wider range of funding sources and investment opportuni es.
3 mul)ple choice op)ons
What is an auc on market in secondary financial markets?
A market that operates where prices are determined by the highest bidder.
3 mul)ple choice op)ons
Why are efficient, well-developed financial markets important for stock pricing?
,They produce more reliable stock prices.
3 mul)ple choice op)ons
Talia is considering purchasing a small, local construc on company. When reviewing the
financials, she no ces that although the company produced $200,000 in net income during the
last year, the retained earnings increased by only $50,000.
Which scenario would explain why the change in retained earnings from the previous year did
not increase by the total income earned?
The remaining earnings were paid out as dividends to shareholders.
3 mul)ple choice op)ons
What does Retained Earnings represent in the equity sec on of the balance sheet?
The cumula ve total of earnings not paid out as dividends to stockholders.
3 mul)ple choice op)ons
In the statement of cash flows, why is deprecia on expense added back to net income when
calcula ng cash frows from opera ons (CFO)?
Because it is a non-cash expense.
3 mul)ple choice op)ons
An investor is considering pu:ng money into a start-up company. They ask for the company's
projected statement of cash flows for the next period.
How will this help the investor evaluate the start-up's projected performance?
it will show the cash flows the firm expects from opera ng, inves ng, and financing ac vi es.
3 mul)ple choice op)ons
The statement of cash flows for Quiet Flag Industries is provided below. CFO indicates cash flow
from opera ons, CFI indicates cash flow from inves ng, and CFF indicates cash flow from
financing.
What can be concluded about the firm's cash flows during the year?
The company relied heavily on external financing for cash during the year.
3 mul)ple choice op)ons
In the statement of cash flows, when using the indirect method of calcula ng cash flow from
opera ons (CFO), how is an increase in opera ng asset accounts (other than cash) treated?
,It is subtracted from net income.
3 mul)ple choice op)ons
Why is scrubbing the data crucial when comparing a company with its peers through ra o
analysis?
To adjust for differences in fiscal year-ends and accoun ng prac ces among companies
3 mul)ple choice op)ons
Which difficulty may arise when performing ra o analysis for seasonal businesses?
Seasonal varia ons make it challenging to compare ra os across firms if the repor ng dates of
the company's financial statements are different.
3 mul)ple choice op)ons
Use Freedom Rock Bicycles' financial statements for 20X3 below to answer the following
ques on.
What was Freedom Rock Bicycles' total asset turnover ra o for the year?
2.50
3 mul)ple choice op)ons
Use Rusty RoboTech's financial statements for 20X3 below to answer the following ques on.
What is Rusty RoboTech's profit margin for the year?
40%
3 mul)ple choice op)ons
What informa on does the return on equity (ROE) ra on provide?
It indicates the earnings generated for each dollar of equity invested.
3 mul)ple choice op)ons
Which factor is an example of an external risk that should be considered in an integrated
financial analysis of a firm?
Changes in compe ve forces due to economic turndown
3 mul)ple choice op)ons
What is the primary characteris c of the cash flow pa"ern for a typical corporate bond?
A stream of annual or semiannual interest payments and a final principal repayment
, 3 mul)ple choice op)ons
How is the number of periods (n) calculated for a bond paying semiannual coupons?
It is mul plied by 2.
3 mul)ple choice op)ons
In the case of bankruptcy, what represents a primary difference in the claim hierarchy between
common and preferred stockholders?
Preferred stockholders have a higher claim on company assets in case of liquida on.
3 mul)ple choice op)ons
What is a key advantage of holding common stock over preferred stock?
Poten al for capital apprecia on.
3 mul)ple choice op)ons
What is the book value per share if a company's total equity is $200 million and it has 20 million
shares outstanding?
$10
3 mul)ple choice op)ons
A company with a market capitaliza on of $500 million has net income of $25 million.
What is the company's earnings per share (EPS) if it has 10 million shares outstanding?
$2.50
3 mul)ple choice op)ons
A company is expected to pay a dividend of $1.80 next year, which is expected to grow at a rate
of 7% per year indefinitely. The required rate of return on the company's stock is 11%.
What is the value of the stock using the Gordon growth model?
$45.00
3 mul)ple choice op)ons
A company's stock is currently paying a dividend of $4.00. The dividends are expected to grow
at 3% annually, and the required rate of return is 11%.
What is the value of the stock using the Gordon growth model?
$51.50
