WGU C214 Financial Management Exam
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Verified Objective Assessment Answers
ORIGINAL COPY – 100% VERIFIED OBJECTIVE ASSESSMENT ANSWERS 100
QUESTIONS | ANSWERS IN RED | DETAILED RATIONALES LATEST 2025/2026
CURRICULUM | A+ GRADED
Q1. What is the primary goal of financial management? Maximize shareholder wealth.
Rationale: Measured by stock price; long-term value creation over short-term profits.
Q2. Which financial statement shows revenues, expenses, and net income? Income
statement. Rationale: Also called profit & loss; covers a period.
Q3. What is the accounting equation? Assets = Liabilities + Equity. Rationale:
Foundation of double-entry bookkeeping.
Q4. Current ratio is calculated as: Current assets / Current liabilities. Rationale:
Measures short-term liquidity.
Q5. A company has $200,000 assets, $80,000 liabilities. Owner’s equity is: $120,000.
Rationale: Assets – Liabilities = Equity.
Q6. Depreciation is a: Non-cash expense. Rationale: Reduces taxable income but not
cash outflow.
, Q7. What is the formula for net working capital? Current assets – Current liabilities.
Rationale: Indicates operating liquidity.
Q8. Gross profit margin = (Revenue – COGS) / Revenue. Rationale: Measures
production efficiency.
Q9. Operating cash flow is closest to: EBITDA. Rationale: Operating cash flow ≈
EBITDA + changes in working capital – taxes.
Q10. What is the DuPont identity? ROE = Profit margin × Asset turnover × Equity
multiplier. Rationale: Breaks down return on equity.
Q11. Time value of money concept: $1 today is worth more than $1 tomorrow because: It
can be invested to earn interest. Rationale: Opportunity cost.
Q12. Future value of $1,000 at 5% for 3 years (compounded annually)? $1,157.63.
Rationale: FV = PV × (1+r)^n = 1000 × 1.05^3.
Q13. Present value of $1,000 received in 4 years at 8% discount rate? $735.03.
Rationale: PV = FV / (1+r)^n.
Q14. Annuity formula for PV of ordinary annuity? PV = PMT × [1 – (1+r)^-n]/r.
Rationale: Used for loan/mortgage payments.
Q15. What is the rule of 72? Years to double = 72 / annual interest rate. Rationale:
Quick compounding estimate.
() – Original Copy, 100%
Verified Objective Assessment Answers
ORIGINAL COPY – 100% VERIFIED OBJECTIVE ASSESSMENT ANSWERS 100
QUESTIONS | ANSWERS IN RED | DETAILED RATIONALES LATEST 2025/2026
CURRICULUM | A+ GRADED
Q1. What is the primary goal of financial management? Maximize shareholder wealth.
Rationale: Measured by stock price; long-term value creation over short-term profits.
Q2. Which financial statement shows revenues, expenses, and net income? Income
statement. Rationale: Also called profit & loss; covers a period.
Q3. What is the accounting equation? Assets = Liabilities + Equity. Rationale:
Foundation of double-entry bookkeeping.
Q4. Current ratio is calculated as: Current assets / Current liabilities. Rationale:
Measures short-term liquidity.
Q5. A company has $200,000 assets, $80,000 liabilities. Owner’s equity is: $120,000.
Rationale: Assets – Liabilities = Equity.
Q6. Depreciation is a: Non-cash expense. Rationale: Reduces taxable income but not
cash outflow.
, Q7. What is the formula for net working capital? Current assets – Current liabilities.
Rationale: Indicates operating liquidity.
Q8. Gross profit margin = (Revenue – COGS) / Revenue. Rationale: Measures
production efficiency.
Q9. Operating cash flow is closest to: EBITDA. Rationale: Operating cash flow ≈
EBITDA + changes in working capital – taxes.
Q10. What is the DuPont identity? ROE = Profit margin × Asset turnover × Equity
multiplier. Rationale: Breaks down return on equity.
Q11. Time value of money concept: $1 today is worth more than $1 tomorrow because: It
can be invested to earn interest. Rationale: Opportunity cost.
Q12. Future value of $1,000 at 5% for 3 years (compounded annually)? $1,157.63.
Rationale: FV = PV × (1+r)^n = 1000 × 1.05^3.
Q13. Present value of $1,000 received in 4 years at 8% discount rate? $735.03.
Rationale: PV = FV / (1+r)^n.
Q14. Annuity formula for PV of ordinary annuity? PV = PMT × [1 – (1+r)^-n]/r.
Rationale: Used for loan/mortgage payments.
Q15. What is the rule of 72? Years to double = 72 / annual interest rate. Rationale:
Quick compounding estimate.
