WGU D366 Section 2 exam| Questions and Answers | 2026/2027 Update |
100% correct| graded a+!!!! | pass!!
A company has the following capital structure during its most recent year:
January 1December 31Preferred stock, $30 par value, 500 shares issued and
outstanding at January 1 and December 31$ 30,000$ 30,000Common stock, $15 par
value, 5,000 shares issued; 5,000 shares outstanding at January 1 and 4,000 shares
outstanding at December 31$ 75,000$ 75,000Additional paid-in
capital$105,000$105,000Retained earnings$120,000$128,500Treasury shares—
common (1,000 shares)—($ 45,000)Total shareholders' equity$330,000$293,500
Retained earnings changed during the year as follows:
Retained earnings, January 1$120,000Net income$ 11,500Preferred stock dividends($
750)Common stock dividends($ 2,250)Retained earnings, December 31$ 128,500
The firm acquired 1,000 shares of treasury stock on July 1, preferred stock is
convertible into 1,000 shares of common stock, and the company has stock options
outstanding and "in the money," where sha _answer-$1.98
A company has the following capital structure during its most recent year:
January 1December 31Preferred stock, $10 par value, 500 shares issued and
outstanding at January 1 and December 31$ 5,000$ 5,000Common stock, $5 par value,
4,000 shares issued; 4,000 shares outstanding at January 1 and 3,000 shares
outstanding at December 31$20,000$20,000Additional paid-in
capital$25,000$25,000Retained earnings$40,000$42,800Treasury shares—common
(1,000 shares)—($15,000)Total shareholders' equity$90,000$77,800
Retained earnings changed during the year as follows:
Retained earnings, January 1$40,000Net income$ 3,750Preferred stock dividends($
250)Common stock dividends($ 700)Retained earnings, December 31$42,800
The firm acquired 1,000 shares of treasury stock on July 1, and preferred stock is
convertible into 1,000 shares of common stock.
What is the company's dilutive earnings per share? _answer-$0.83
Diluted EPS is calculated as:= (Net income available to common shareholders +
Adjustments for dilutive securities) / (Weighted-average number of common shares
outstanding + Weighted-average number of shares issuable from dilutive securities)=
($3,750 - $250 + $250) / (0.5 x [4,000 + 3,000]) + (1.0 x 1,000)= $3,750 / (0.5 x 7,000) +
1,000= $3,,500 + 1,000= $3,,500= $0.83
A company reports the following amounts for 2021:
Net income$100,000Sales$550,000Interest expense$6,500Average total
assets$700,000Average common shareholders' equity$600,000
, The company did not have preferred stock outstanding or noncontrolling interest in its
equity, and its tax rate is 35%.
What is the company's rate of return on assets (ROA)? _answer-14.89%
A company reports the following amounts for 2021:
Net income$100,000Sales$550,000Interest expense$6,500Average total
assets$700,000Average common shareholders' equity$600,000
The company did not have preferred stock outstanding or noncontrolling interest in its
equity, and its tax rate is 35%.
What is the company's rate of return on common equity (ROCE)? _answer-16.67%
A company reports the following amounts for 2021:
Net income$150,000Sales$850,000Interest expense$10,000Beginning total
assets$900,000Ending total assets$800,000Noncontrolling interest$20,000
The company did not have preferred stock outstanding, and its tax rate is 35%.
What is the company's rate of return on assets (ROA)? _answer-20.76%
A company reports the following amounts for 2021:
Net income$90,000Sales$900,000Beginning common shareholders'
equity$300,000Ending common shareholders' equity$360,000Beginning preferred
shareholders' equity$265,000Ending preferred shareholders' equity$265,000Preferred
dividends$20,000
The company had no noncontrolling interest in its equity, and its tax rate is 35%.
What is the company's rate of return common equity (ROCE)? _answer-21.21%
A company reports the following amounts for 2021:
Net income$125,000Sales$850,000Average common shareholders'
equity$400,000Average preferred shareholders' equity$300,000Noncontrolling
interest$30,000Preferred dividends$25,000
What is the company's rate of return on common equity (ROCE)? _answer-17.50%
A company reports the following amounts for 2021:
Net income$120,000Sales$680,000Interest expense$8,000Average total
assets$800,000Average common shareholders' equity$700,000Noncontrolling
interest$12,000
The company did not have preferred stock outstanding, and its tax rate is 30%.
What is the company's rate of return on assets (ROA)? _answer-17.20%
Which type of risk affects all participants in the market equally, rather than on a firm-
specific basis? _answer-Systematic risk
For the last couple of fiscal years, a company reported decreasing sales and increasing
operating expenses. To help address the resulting cash flow, the company increased its
short-term borrowings.
Which type of risk does the company face? _answer-Bankruptcy risk
100% correct| graded a+!!!! | pass!!
A company has the following capital structure during its most recent year:
January 1December 31Preferred stock, $30 par value, 500 shares issued and
outstanding at January 1 and December 31$ 30,000$ 30,000Common stock, $15 par
value, 5,000 shares issued; 5,000 shares outstanding at January 1 and 4,000 shares
outstanding at December 31$ 75,000$ 75,000Additional paid-in
capital$105,000$105,000Retained earnings$120,000$128,500Treasury shares—
common (1,000 shares)—($ 45,000)Total shareholders' equity$330,000$293,500
Retained earnings changed during the year as follows:
Retained earnings, January 1$120,000Net income$ 11,500Preferred stock dividends($
750)Common stock dividends($ 2,250)Retained earnings, December 31$ 128,500
The firm acquired 1,000 shares of treasury stock on July 1, preferred stock is
convertible into 1,000 shares of common stock, and the company has stock options
outstanding and "in the money," where sha _answer-$1.98
A company has the following capital structure during its most recent year:
January 1December 31Preferred stock, $10 par value, 500 shares issued and
outstanding at January 1 and December 31$ 5,000$ 5,000Common stock, $5 par value,
4,000 shares issued; 4,000 shares outstanding at January 1 and 3,000 shares
outstanding at December 31$20,000$20,000Additional paid-in
capital$25,000$25,000Retained earnings$40,000$42,800Treasury shares—common
(1,000 shares)—($15,000)Total shareholders' equity$90,000$77,800
Retained earnings changed during the year as follows:
Retained earnings, January 1$40,000Net income$ 3,750Preferred stock dividends($
250)Common stock dividends($ 700)Retained earnings, December 31$42,800
The firm acquired 1,000 shares of treasury stock on July 1, and preferred stock is
convertible into 1,000 shares of common stock.
What is the company's dilutive earnings per share? _answer-$0.83
Diluted EPS is calculated as:= (Net income available to common shareholders +
Adjustments for dilutive securities) / (Weighted-average number of common shares
outstanding + Weighted-average number of shares issuable from dilutive securities)=
($3,750 - $250 + $250) / (0.5 x [4,000 + 3,000]) + (1.0 x 1,000)= $3,750 / (0.5 x 7,000) +
1,000= $3,,500 + 1,000= $3,,500= $0.83
A company reports the following amounts for 2021:
Net income$100,000Sales$550,000Interest expense$6,500Average total
assets$700,000Average common shareholders' equity$600,000
, The company did not have preferred stock outstanding or noncontrolling interest in its
equity, and its tax rate is 35%.
What is the company's rate of return on assets (ROA)? _answer-14.89%
A company reports the following amounts for 2021:
Net income$100,000Sales$550,000Interest expense$6,500Average total
assets$700,000Average common shareholders' equity$600,000
The company did not have preferred stock outstanding or noncontrolling interest in its
equity, and its tax rate is 35%.
What is the company's rate of return on common equity (ROCE)? _answer-16.67%
A company reports the following amounts for 2021:
Net income$150,000Sales$850,000Interest expense$10,000Beginning total
assets$900,000Ending total assets$800,000Noncontrolling interest$20,000
The company did not have preferred stock outstanding, and its tax rate is 35%.
What is the company's rate of return on assets (ROA)? _answer-20.76%
A company reports the following amounts for 2021:
Net income$90,000Sales$900,000Beginning common shareholders'
equity$300,000Ending common shareholders' equity$360,000Beginning preferred
shareholders' equity$265,000Ending preferred shareholders' equity$265,000Preferred
dividends$20,000
The company had no noncontrolling interest in its equity, and its tax rate is 35%.
What is the company's rate of return common equity (ROCE)? _answer-21.21%
A company reports the following amounts for 2021:
Net income$125,000Sales$850,000Average common shareholders'
equity$400,000Average preferred shareholders' equity$300,000Noncontrolling
interest$30,000Preferred dividends$25,000
What is the company's rate of return on common equity (ROCE)? _answer-17.50%
A company reports the following amounts for 2021:
Net income$120,000Sales$680,000Interest expense$8,000Average total
assets$800,000Average common shareholders' equity$700,000Noncontrolling
interest$12,000
The company did not have preferred stock outstanding, and its tax rate is 30%.
What is the company's rate of return on assets (ROA)? _answer-17.20%
Which type of risk affects all participants in the market equally, rather than on a firm-
specific basis? _answer-Systematic risk
For the last couple of fiscal years, a company reported decreasing sales and increasing
operating expenses. To help address the resulting cash flow, the company increased its
short-term borrowings.
Which type of risk does the company face? _answer-Bankruptcy risk
