D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
“WGU D755 Introduction to Business Finance – Complete
Study Guide 2026–2027 | 100 Pages | Exam Prep,
Assessments & A+ Success Notes”
Table of Contents
Unit 1: Foundations of Business Finance ..................................................................... 3
1.1 Role of Finance & Financial Managers ..................................................................... 3
1.2 Financial Statements Overview ..................................................................... 4
1.3 Financial Ratios Analysis ..................................................................... 6
1.4 Cash Flow Statements ..................................................................... 9
Unit 1 Assessment Questions ..................................................................... 11
Unit 2: Time Value of Money ..................................................................... 14
2.1 Present Value & Future Value ..................................................................... 14
2.2 Annuities & Perpetuities ..................................................................... 16
2.3 Loan Amortization ..................................................................... 18
Unit 2 Assessment Questions ..................................................................... 20
Unit 3: Risk, Return & CAPM ..................................................................... 24
3.1 Risk & Return Fundamentals ..................................................................... 24
3.2 Portfolio Theory & Diversification ..................................................................... 26
3.3 Capital Asset Pricing Model ..................................................................... 28
Unit 3 Assessment Questions ..................................................................... 30
Unit 4: Bond & Stock Valuation ..................................................................... 34
4.1 Bond Valuation ..................................................................... 34
4.2 Stock Valuation Models ..................................................................... 37
Unit 4 Assessment Questions ..................................................................... 40
Unit 5: Capital Budgeting ..................................................................... 44
5.1 Net Present Value (NPV) ..................................................................... 44
5.2 Internal Rate of Return (IRR) & MIRR ..................................................................... 46
5.3 Payback Period & Profitability Index ..................................................................... 48
Unit 5 Assessment Questions ..................................................................... 50
Unit 6: Cost of Capital & WACC ..................................................................... 54
6.1 Cost of Debt & Equity ..................................................................... 54
6.2 Weighted Average Cost of Capital ..................................................................... 56
Unit 6 Assessment Questions ..................................................................... 58
Unit 7: Capital Structure & Leverage ..................................................................... 62
7.1 Operating & Financial Leverage ..................................................................... 62
7.2 Capital Structure Theory ..................................................................... 64
Unit 7 Assessment Questions ..................................................................... 66
Unit 8: Working Capital Management ..................................................................... 70
8.1 Cash & Liquidity Management ..................................................................... 70
8.2 Receivables & Payables ..................................................................... 72
Unit 8 Assessment Questions ..................................................................... 74
Unit 9: Financial Planning & Forecasting ..................................................................... 78
9.1 Pro Forma Statements & Forecasting ..................................................................... 78
9.2 Ratio Analysis & DuPont ..................................................................... 80
WGU D755 | Business Finance Assessments | Page
,D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
Unit 9 Assessment Questions ..................................................................... 82
Unit 10: Comprehensive Final Assessments ..................................................................... 86
Mixed Practice Exam A (50 Questions) ..................................................................... 86
Mixed Practice Exam B (50 Questions) ..................................................................... 93
Appendix: Key Formulas Reference Sheet ..................................................................... 100
WGU D755 | Business Finance Assessments | Page
,D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
Unit 1: Foundations of Business Finance & Financial
Statements
1.1 Role of Finance & Financial Managers
Business finance is the study of how organizations acquire, allocate, and manage money to achieve
their strategic objectives. Finance sits at the intersection of accounting, economics, and management,
providing the analytical framework for every major business decision.
Three Core Areas of Finance
Area Focus Examples
Corporate Finance How firms raise capital and invest it Capital budgeting, capital structure,
to maximize shareholder value dividends
Investments Valuation of securities and portfolio Stocks, bonds, derivatives, mutual
management funds
Financial Markets Institutions and markets that Stock exchanges, money markets,
facilitate capital flows banking
Goals of the Firm
Item Details
Shareholder Wealth Primary goal in finance — maximize the market value (stock price
Maximization × shares) of the owners' equity. Differs from profit maximization
because it accounts for timing, risk, and cash flows.
Profit Maximization Secondary / accounting goal — maximize net income; may conflict
with shareholder value (ignores risk, timing, and non-cash items).
Stakeholder Value Broader goal — balance the interests of shareholders, employees,
customers, community, and creditors.
Agency Problem Conflict between managers (agents) and shareholders (principals).
Managers may act in their own interest. Mitigated by incentive
compensation, monitoring, and governance.
Agency Costs Costs to monitor and align managers with shareholder interests:
audit fees, incentive pay, board oversight, legal costs.
Forms of Business Organization
Form Ownership Liability Tax Treatment
Sole Single owner Unlimited personal Pass-through (personal income
Proprietorship liability tax)
WGU D755 | Business Finance Assessments | Page
, D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
Partnership 2+ partners Generally Pass-through
unlimited; LP has
limited
Corporation (C- Shareholders Limited to Double taxation (corporate +
Corp) investment dividend)
S-Corporation ≤ 100 US Limited Pass-through (avoids double tax)
shareholders
LLC Members Limited Flexible (pass-through or
corporate)
1.2 Financial Statements Overview
The three core financial statements are the Balance Sheet, Income Statement, and Cash Flow
Statement. Together they provide a complete picture of a firm's financial health, performance, and
liquidity.
The Balance Sheet (Statement of Financial Position)
The balance sheet presents assets, liabilities, and equity at a specific point in time. It always satisfies:
Assets = Liabilities + Shareholders' Equity.
▶ Formula
Basic Equation: Assets = Liabilities + Shareholders' Equity
Working Capital: WC = Current Assets − Current Liabilities
Category Components Key Items
Current Assets Assets convertible to cash within 1 Cash, marketable securities,
year accounts receivable, inventory,
prepaid expenses
Non-Current Assets Long-term assets PP&E (net of depreciation),
intangibles (goodwill, patents), LT
investments
Current Liabilities Obligations due within 1 year Accounts payable, short-term debt,
accrued liabilities, deferred revenue
Long-Term Liabilities Obligations due > 1 year Long-term debt/bonds, deferred tax
liabilities, pension obligations
Shareholders' Equity Residual claim on assets Common stock, APIC, retained
earnings, treasury stock, AOCI
The Income Statement (Profit & Loss Statement)
The income statement shows revenues, expenses, and profits over a period (quarter or year). It
measures operating performance from the top line (revenues) to the bottom line (net income).
WGU D755 | Business Finance Assessments | Page
“WGU D755 Introduction to Business Finance – Complete
Study Guide 2026–2027 | 100 Pages | Exam Prep,
Assessments & A+ Success Notes”
Table of Contents
Unit 1: Foundations of Business Finance ..................................................................... 3
1.1 Role of Finance & Financial Managers ..................................................................... 3
1.2 Financial Statements Overview ..................................................................... 4
1.3 Financial Ratios Analysis ..................................................................... 6
1.4 Cash Flow Statements ..................................................................... 9
Unit 1 Assessment Questions ..................................................................... 11
Unit 2: Time Value of Money ..................................................................... 14
2.1 Present Value & Future Value ..................................................................... 14
2.2 Annuities & Perpetuities ..................................................................... 16
2.3 Loan Amortization ..................................................................... 18
Unit 2 Assessment Questions ..................................................................... 20
Unit 3: Risk, Return & CAPM ..................................................................... 24
3.1 Risk & Return Fundamentals ..................................................................... 24
3.2 Portfolio Theory & Diversification ..................................................................... 26
3.3 Capital Asset Pricing Model ..................................................................... 28
Unit 3 Assessment Questions ..................................................................... 30
Unit 4: Bond & Stock Valuation ..................................................................... 34
4.1 Bond Valuation ..................................................................... 34
4.2 Stock Valuation Models ..................................................................... 37
Unit 4 Assessment Questions ..................................................................... 40
Unit 5: Capital Budgeting ..................................................................... 44
5.1 Net Present Value (NPV) ..................................................................... 44
5.2 Internal Rate of Return (IRR) & MIRR ..................................................................... 46
5.3 Payback Period & Profitability Index ..................................................................... 48
Unit 5 Assessment Questions ..................................................................... 50
Unit 6: Cost of Capital & WACC ..................................................................... 54
6.1 Cost of Debt & Equity ..................................................................... 54
6.2 Weighted Average Cost of Capital ..................................................................... 56
Unit 6 Assessment Questions ..................................................................... 58
Unit 7: Capital Structure & Leverage ..................................................................... 62
7.1 Operating & Financial Leverage ..................................................................... 62
7.2 Capital Structure Theory ..................................................................... 64
Unit 7 Assessment Questions ..................................................................... 66
Unit 8: Working Capital Management ..................................................................... 70
8.1 Cash & Liquidity Management ..................................................................... 70
8.2 Receivables & Payables ..................................................................... 72
Unit 8 Assessment Questions ..................................................................... 74
Unit 9: Financial Planning & Forecasting ..................................................................... 78
9.1 Pro Forma Statements & Forecasting ..................................................................... 78
9.2 Ratio Analysis & DuPont ..................................................................... 80
WGU D755 | Business Finance Assessments | Page
,D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
Unit 9 Assessment Questions ..................................................................... 82
Unit 10: Comprehensive Final Assessments ..................................................................... 86
Mixed Practice Exam A (50 Questions) ..................................................................... 86
Mixed Practice Exam B (50 Questions) ..................................................................... 93
Appendix: Key Formulas Reference Sheet ..................................................................... 100
WGU D755 | Business Finance Assessments | Page
,D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
Unit 1: Foundations of Business Finance & Financial
Statements
1.1 Role of Finance & Financial Managers
Business finance is the study of how organizations acquire, allocate, and manage money to achieve
their strategic objectives. Finance sits at the intersection of accounting, economics, and management,
providing the analytical framework for every major business decision.
Three Core Areas of Finance
Area Focus Examples
Corporate Finance How firms raise capital and invest it Capital budgeting, capital structure,
to maximize shareholder value dividends
Investments Valuation of securities and portfolio Stocks, bonds, derivatives, mutual
management funds
Financial Markets Institutions and markets that Stock exchanges, money markets,
facilitate capital flows banking
Goals of the Firm
Item Details
Shareholder Wealth Primary goal in finance — maximize the market value (stock price
Maximization × shares) of the owners' equity. Differs from profit maximization
because it accounts for timing, risk, and cash flows.
Profit Maximization Secondary / accounting goal — maximize net income; may conflict
with shareholder value (ignores risk, timing, and non-cash items).
Stakeholder Value Broader goal — balance the interests of shareholders, employees,
customers, community, and creditors.
Agency Problem Conflict between managers (agents) and shareholders (principals).
Managers may act in their own interest. Mitigated by incentive
compensation, monitoring, and governance.
Agency Costs Costs to monitor and align managers with shareholder interests:
audit fees, incentive pay, board oversight, legal costs.
Forms of Business Organization
Form Ownership Liability Tax Treatment
Sole Single owner Unlimited personal Pass-through (personal income
Proprietorship liability tax)
WGU D755 | Business Finance Assessments | Page
, D755 Introduction to Business Finance | Comprehensive Assessments | 2026–2027
Partnership 2+ partners Generally Pass-through
unlimited; LP has
limited
Corporation (C- Shareholders Limited to Double taxation (corporate +
Corp) investment dividend)
S-Corporation ≤ 100 US Limited Pass-through (avoids double tax)
shareholders
LLC Members Limited Flexible (pass-through or
corporate)
1.2 Financial Statements Overview
The three core financial statements are the Balance Sheet, Income Statement, and Cash Flow
Statement. Together they provide a complete picture of a firm's financial health, performance, and
liquidity.
The Balance Sheet (Statement of Financial Position)
The balance sheet presents assets, liabilities, and equity at a specific point in time. It always satisfies:
Assets = Liabilities + Shareholders' Equity.
▶ Formula
Basic Equation: Assets = Liabilities + Shareholders' Equity
Working Capital: WC = Current Assets − Current Liabilities
Category Components Key Items
Current Assets Assets convertible to cash within 1 Cash, marketable securities,
year accounts receivable, inventory,
prepaid expenses
Non-Current Assets Long-term assets PP&E (net of depreciation),
intangibles (goodwill, patents), LT
investments
Current Liabilities Obligations due within 1 year Accounts payable, short-term debt,
accrued liabilities, deferred revenue
Long-Term Liabilities Obligations due > 1 year Long-term debt/bonds, deferred tax
liabilities, pension obligations
Shareholders' Equity Residual claim on assets Common stock, APIC, retained
earnings, treasury stock, AOCI
The Income Statement (Profit & Loss Statement)
The income statement shows revenues, expenses, and profits over a period (quarter or year). It
measures operating performance from the top line (revenues) to the bottom line (net income).
WGU D755 | Business Finance Assessments | Page
