WGU C213 INTRO TO FINANCIAL
ANALYSIS QUESTIONS & ACTUAL
CORRECT ANSWERS
Financial statement analysis - Correct Answer ✔✔ involves the examination of both the
relationships among financial statement numbers and the trends in those numbers over
time
Financial Ratios - Correct Answer ✔✔ Relationships between financial statement
amounts
DuPont Framework - Correct Answer ✔✔ systematic approach to identifying general
factors causing ROE to deviate from normal
External Users - Correct Answer ✔✔ investors and creditors, financial statement
analysis plays the same role in the decision-making process
Internal Users - Correct Answer ✔✔ management uses the analysis to help in making
operating, investing, and financing decisions, investors and creditors analyze financial
statements to decide whether to invest in, or loan money to, a company
Debt Ratio - Correct Answer ✔✔ frequently used measure of leverage - Total
Liabilities / Total Assets
Current Ratio - Correct Answer ✔✔ is a comparison of current assets (cash,
receivables, and inventory) with current liabilities.
Acid Test Ratio - Correct Answer ✔✔ the Acid-test or quick ratio or liquidity ratio
measures the ability of a company to use its near cash or quick assets to extinguish or
retire its current liabilities immediately
Return on Sales - Correct Answer ✔✔ As mentioned earlier, DuPont makes 8.0¢ of
profit on each dollar of sales. Net income / Divided by Sales
Asset Turnover - Correct Answer ✔✔ A financial ratio that gives an overall measure of
company efficiency
Return on Equity - Correct Answer ✔✔ is the overall measure of the performance of a
company
Price Earning Ratio - Correct Answer ✔✔ an equity valuation multiple defined as market
price per share divided by annual earnings per share
ANALYSIS QUESTIONS & ACTUAL
CORRECT ANSWERS
Financial statement analysis - Correct Answer ✔✔ involves the examination of both the
relationships among financial statement numbers and the trends in those numbers over
time
Financial Ratios - Correct Answer ✔✔ Relationships between financial statement
amounts
DuPont Framework - Correct Answer ✔✔ systematic approach to identifying general
factors causing ROE to deviate from normal
External Users - Correct Answer ✔✔ investors and creditors, financial statement
analysis plays the same role in the decision-making process
Internal Users - Correct Answer ✔✔ management uses the analysis to help in making
operating, investing, and financing decisions, investors and creditors analyze financial
statements to decide whether to invest in, or loan money to, a company
Debt Ratio - Correct Answer ✔✔ frequently used measure of leverage - Total
Liabilities / Total Assets
Current Ratio - Correct Answer ✔✔ is a comparison of current assets (cash,
receivables, and inventory) with current liabilities.
Acid Test Ratio - Correct Answer ✔✔ the Acid-test or quick ratio or liquidity ratio
measures the ability of a company to use its near cash or quick assets to extinguish or
retire its current liabilities immediately
Return on Sales - Correct Answer ✔✔ As mentioned earlier, DuPont makes 8.0¢ of
profit on each dollar of sales. Net income / Divided by Sales
Asset Turnover - Correct Answer ✔✔ A financial ratio that gives an overall measure of
company efficiency
Return on Equity - Correct Answer ✔✔ is the overall measure of the performance of a
company
Price Earning Ratio - Correct Answer ✔✔ an equity valuation multiple defined as market
price per share divided by annual earnings per share
