WGU C213 FINAL EXAM ACCOUNTING FOR
DECISION MAKERS 2026 FULL PREPARATION
WITH CORRECT ANSWERS
◉ Return on sales. Answer: Net income/sales. A measure of the
amount of profit per dollar of sales. PROFITABILITY.
◉ Asset Turnover. Answer: Sales/total assets. A measure of a
companies efficiency. This number can be understated and can be
misleading. IT is the number of dollars in sales generated by each
dollar of asset.
◉ Return on equity (ROE). Answer: Net income/Stockholder equity.
A measure of the amount of profit earned per dollar of investment.
◉ Mother of all financial ratios. if you are an investor, you want to
know the ROE, the number tells you as the investor how much
money you will make per year.. Answer: ROE
◉ Price earning ratio. Answer: Market value of shares/net income. A
measure of growth potential earnings stability, and management
capabilities.
,◉ Price earnings ratio. Answer: Reflects market expectations of
growth and earnings of the company in the future. Company with
P/E ratio of 10-25 is normal. Netflix was 679 in 2012!
◉ Common size financial statement. Answer: Solution to comparing
two companies that are not the same size. DIVIDE ALL NUMBERS BY
SALES FOR THE YEAR.
◉ Common size balance sheet. Answer: Divide balance sheet items
by either sales or assets. For EFFICENCY.
◉ Sale. Answer: How efficiently are assets generating sales dollars.
EFFICIENCY. Sales revenue.
◉ Assets mix. Answer: the proportion of assets in each asset
category.
◉ Common size income statement. Answer: Each item on the
statement is expressed as a % of revenue
◉ Ratio Framework, 1st step.. Answer: Dupont framework-used to
examine financially statements of any company
,◉ Assets-to-equity ratio. Answer: The number of dollars of assets
acquired for each dollar invested by stockholders. LEVERAGE.
Assets/equity
◉ Profitability, efficiency, and leverage. Answer: 3 ways to improve
low return on equity
◉ Profitability ratios. Answer: Common size income statement
◉ Efficiency ratios. Answer: Average collection period, days of sales
inventory, fixed asset turnover are:
◉ Leverage ratio. Answer: Debt ratios, debt to equity ratios times
interest earned.
◉ Average collection period. Answer: Average number of days that
elapse between the sale and cash collection. AVERAGE ACCOUNTS
RECEIVABLE/ AVERAGE DAY OF SALES. Add all up and divide by 2.
◉ Number of days sale in inventory. Answer: The average number of
days of sales that can be made, using only the supply of inventory at
hand
, ◉ Fixed Asset Turnover. Answer: Number of dollars in sales
generated by each dollar of assets. Sales/Avg fixed assets. Whole sale
numbers. (Land, trucks, equipment, plant).
◉ Leverage ratios. Answer: The higher leverage increases return on
equity through: more Money borrowing, more assets, more sales,
more net income
◉ Debt ratio. Answer: The % of total funds, both borrowed and
invested, that a company acquires through borrowing.
◉ No, they are two different things, they are not to be compared..
Answer: Should you compare debt to debt ratio and debt to equity
ratio?
◉ Debt to equity ratio. Answer: The number of dollars of borrowing
for each dollar of equity investment. Total liabilities/stockholders
equity.
◉ Time interest earned. Answer: indication of a companies ability to
meet interest payments
◉ Cash flow to net income. Answer: reflects the extent to which
accrual accounting assumptions and adjustments have been
DECISION MAKERS 2026 FULL PREPARATION
WITH CORRECT ANSWERS
◉ Return on sales. Answer: Net income/sales. A measure of the
amount of profit per dollar of sales. PROFITABILITY.
◉ Asset Turnover. Answer: Sales/total assets. A measure of a
companies efficiency. This number can be understated and can be
misleading. IT is the number of dollars in sales generated by each
dollar of asset.
◉ Return on equity (ROE). Answer: Net income/Stockholder equity.
A measure of the amount of profit earned per dollar of investment.
◉ Mother of all financial ratios. if you are an investor, you want to
know the ROE, the number tells you as the investor how much
money you will make per year.. Answer: ROE
◉ Price earning ratio. Answer: Market value of shares/net income. A
measure of growth potential earnings stability, and management
capabilities.
,◉ Price earnings ratio. Answer: Reflects market expectations of
growth and earnings of the company in the future. Company with
P/E ratio of 10-25 is normal. Netflix was 679 in 2012!
◉ Common size financial statement. Answer: Solution to comparing
two companies that are not the same size. DIVIDE ALL NUMBERS BY
SALES FOR THE YEAR.
◉ Common size balance sheet. Answer: Divide balance sheet items
by either sales or assets. For EFFICENCY.
◉ Sale. Answer: How efficiently are assets generating sales dollars.
EFFICIENCY. Sales revenue.
◉ Assets mix. Answer: the proportion of assets in each asset
category.
◉ Common size income statement. Answer: Each item on the
statement is expressed as a % of revenue
◉ Ratio Framework, 1st step.. Answer: Dupont framework-used to
examine financially statements of any company
,◉ Assets-to-equity ratio. Answer: The number of dollars of assets
acquired for each dollar invested by stockholders. LEVERAGE.
Assets/equity
◉ Profitability, efficiency, and leverage. Answer: 3 ways to improve
low return on equity
◉ Profitability ratios. Answer: Common size income statement
◉ Efficiency ratios. Answer: Average collection period, days of sales
inventory, fixed asset turnover are:
◉ Leverage ratio. Answer: Debt ratios, debt to equity ratios times
interest earned.
◉ Average collection period. Answer: Average number of days that
elapse between the sale and cash collection. AVERAGE ACCOUNTS
RECEIVABLE/ AVERAGE DAY OF SALES. Add all up and divide by 2.
◉ Number of days sale in inventory. Answer: The average number of
days of sales that can be made, using only the supply of inventory at
hand
, ◉ Fixed Asset Turnover. Answer: Number of dollars in sales
generated by each dollar of assets. Sales/Avg fixed assets. Whole sale
numbers. (Land, trucks, equipment, plant).
◉ Leverage ratios. Answer: The higher leverage increases return on
equity through: more Money borrowing, more assets, more sales,
more net income
◉ Debt ratio. Answer: The % of total funds, both borrowed and
invested, that a company acquires through borrowing.
◉ No, they are two different things, they are not to be compared..
Answer: Should you compare debt to debt ratio and debt to equity
ratio?
◉ Debt to equity ratio. Answer: The number of dollars of borrowing
for each dollar of equity investment. Total liabilities/stockholders
equity.
◉ Time interest earned. Answer: indication of a companies ability to
meet interest payments
◉ Cash flow to net income. Answer: reflects the extent to which
accrual accounting assumptions and adjustments have been
