Spring Semester February 2026 WGU D775 Business
Finance Objective Assessment (OA) Exam Prep | Time
Value of Money, Financial Ratios, Risk & Return,
Capital Budgeting, Cost of Capital, Financial
Statement Analysis, Corporate Finance
Fundamentals Study Guide with Practice Questions
, Question 1:
Which of the following is an example of an operating expense?
A) Cost of goods sold
B) Depreciation Expense
C) Interest Expense
D) Administrative Expenses
Correct Option: D
Rationale: Administrative expenses represent the costs incurred in the normal course
of business operations, making them a key component of operating expenses.
Operating expenses reflect the costs necessary to maintain daily operations and are
distinct from costs related to production or financing.
Question 2:
What is the primary purpose of the time value of money concept?
A) To estimate future cash flows
B) To determine the present value of cash flows
C) To calculate interest rates
D) To assess market risk
Correct Option: B
Rationale: The time value of money (TVM) underscores the principle that a dollar today
is worth more than a dollar in the future due to its potential earning capacity.
Understanding TVM is crucial for evaluating the present value of future cash flows,
allowing businesses to make informed investment decisions.
Question 3:
In financial ratios, what does the current ratio measure?
A) Liquidity of a company
B) Profitability
C) Efficiency
D) Leverage
Correct Option: A
Rationale: The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations with its current assets. A higher current ratio indicates better
liquidity, suggesting that the company can easily meet its financial commitments.
Question 4:
Finance Objective Assessment (OA) Exam Prep | Time
Value of Money, Financial Ratios, Risk & Return,
Capital Budgeting, Cost of Capital, Financial
Statement Analysis, Corporate Finance
Fundamentals Study Guide with Practice Questions
, Question 1:
Which of the following is an example of an operating expense?
A) Cost of goods sold
B) Depreciation Expense
C) Interest Expense
D) Administrative Expenses
Correct Option: D
Rationale: Administrative expenses represent the costs incurred in the normal course
of business operations, making them a key component of operating expenses.
Operating expenses reflect the costs necessary to maintain daily operations and are
distinct from costs related to production or financing.
Question 2:
What is the primary purpose of the time value of money concept?
A) To estimate future cash flows
B) To determine the present value of cash flows
C) To calculate interest rates
D) To assess market risk
Correct Option: B
Rationale: The time value of money (TVM) underscores the principle that a dollar today
is worth more than a dollar in the future due to its potential earning capacity.
Understanding TVM is crucial for evaluating the present value of future cash flows,
allowing businesses to make informed investment decisions.
Question 3:
In financial ratios, what does the current ratio measure?
A) Liquidity of a company
B) Profitability
C) Efficiency
D) Leverage
Correct Option: A
Rationale: The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations with its current assets. A higher current ratio indicates better
liquidity, suggesting that the company can easily meet its financial commitments.
Question 4:
