WGU D775 INTRODUCTION TO
BUSINESS FINANCE OBJECTIVE
ASSESSMENT OA 2026 ACTUAL
EXAM .
,1. A type of liquidity ratio that describes the number of times a firm's accounts receivable account is paid off.
Accounts Receivable Turnover = Credit Sales ÷ Accounts Receivable.✓✓ Correct answer Accounts Receivable (A/R) Turnover
2. A type of financial ratio that evaluates how efficiently a firm utilizes its assets to generate sales or revenue; also
known as efficiency ratios.✓✓ Correct answer Activity Ratios
3. An adjustment of the before-tax cost of debt that considers the tax de-ductions on interest expenses. It
reflects the actual cost to a firm for debt financing after benefiting from tax breaks.✓✓ Correct answer After-tax
Cost of Debt
4. Costs that are incurred by the firm when management and employees of a company do not act in the best
interests of shareholders.✓✓ Correct answer Agency Costs
5. A conflict of interest inherent in relationships where one party is expected to act in another's best interests, such
as between shareholders and company management.✓✓ Correct answer Agency Problem
6. The annualized cost of borrowing or the yearly interest rate charged on
a loan or credit balance. Also known as annual percentage rate (APR).✓✓ Correct answer Annual Interest Rate
7. A financial arrangement in which a series of equal payments is made or received at regular intervals over
a specified period of time.✓✓ Correct answer Annuity
8. Resources owned by the company that have economic value.✓✓ Correct answer Assets
9. Financial markets in which buyers and sellers submit competitive bids and offers, with transactions occurring
at prices that match the highest bid with the lowest offer.✓✓ Correct answer Auction Markets
10. A type of liquidity ratio that calculates the average number of days it takes for a company to collect its
receivables. Average Collection Period = Accounts Receivable ÷ Daily Credit Sales.✓✓ Correct answer Average
Collection Period
11. The interest rate on loans or bonds. If a bank provides an interest rate on a small business loan of 9.5%, then 9.5%
is the before-tax cost of debt.✓✓ Correct answer Before-tax Cost of Debt
12. A financial statement that presents a company's financial position at a specific point in time.✓✓ Correct
answer Balance Sheet
, 13. Debt securities issued by corporations or governments to raise capital, where the issuer agrees to pay
back the principal along with interest on specified dates.✓✓ Correct answer Bonds
14. Literal value or face value.✓✓ Correct answer Book Value
15. The area of the business in which 1) financial measures are used to help management make decisions (ratio
analysis), 2) financial analysts use mathe-matical models to select what projects to invest in (capital budgeting),
and 3) financial analysts use the cost of capital to determine whether these projects should be financed with either
debt or equity, and which type of each.✓✓ Correct answer Business Finance
16. When a stock is bought at a lower price than what it is sold. Subtracting
the lower purchase price from the higher sales price is the appreciation.✓✓ Correct answer Capital Appreciation
17. The process by which businesses evaluate potential investments to de-termine if they are worth pursuing. It
assesses projected cash flows, costs, and returns of projects like new machinery or acquisitions to ensure efficient
resource allocation and profitability.✓✓ Correct answer Capital Budgeting
18. The mixture of debt and equity that a firm uses to finance the company.✓✓ Correct answer -
Capital Structure
19. A type of liquidity ratio that provides insight into a company's ability to pay off short-term liabilities with its
cash on hand. Cash Ratio = Cash ÷ Current Liabilities.✓✓ Correct answer Cash Ratio
20. A type of security that represents ownership in a corporation, granting shareholders voting rights and a claim
on a portion of the company's profits through dividends.✓✓ Correct answer Common Stock
21. The process of calculating how a sum of money grows over time as interest is added to both the initial principal
and accumulated interest. In the context of the time value of money, compounding is used to determine the future
value of a lump sum or a series of payments.✓✓ Correct answer Compound Interest
22. The number of times interest is applied to the principal balance of an invest-ment or loan within a specific period,
typically a year. Common compounding frequencies include annually, semiannually, quarterly, monthly, or daily.
The
BUSINESS FINANCE OBJECTIVE
ASSESSMENT OA 2026 ACTUAL
EXAM .
,1. A type of liquidity ratio that describes the number of times a firm's accounts receivable account is paid off.
Accounts Receivable Turnover = Credit Sales ÷ Accounts Receivable.✓✓ Correct answer Accounts Receivable (A/R) Turnover
2. A type of financial ratio that evaluates how efficiently a firm utilizes its assets to generate sales or revenue; also
known as efficiency ratios.✓✓ Correct answer Activity Ratios
3. An adjustment of the before-tax cost of debt that considers the tax de-ductions on interest expenses. It
reflects the actual cost to a firm for debt financing after benefiting from tax breaks.✓✓ Correct answer After-tax
Cost of Debt
4. Costs that are incurred by the firm when management and employees of a company do not act in the best
interests of shareholders.✓✓ Correct answer Agency Costs
5. A conflict of interest inherent in relationships where one party is expected to act in another's best interests, such
as between shareholders and company management.✓✓ Correct answer Agency Problem
6. The annualized cost of borrowing or the yearly interest rate charged on
a loan or credit balance. Also known as annual percentage rate (APR).✓✓ Correct answer Annual Interest Rate
7. A financial arrangement in which a series of equal payments is made or received at regular intervals over
a specified period of time.✓✓ Correct answer Annuity
8. Resources owned by the company that have economic value.✓✓ Correct answer Assets
9. Financial markets in which buyers and sellers submit competitive bids and offers, with transactions occurring
at prices that match the highest bid with the lowest offer.✓✓ Correct answer Auction Markets
10. A type of liquidity ratio that calculates the average number of days it takes for a company to collect its
receivables. Average Collection Period = Accounts Receivable ÷ Daily Credit Sales.✓✓ Correct answer Average
Collection Period
11. The interest rate on loans or bonds. If a bank provides an interest rate on a small business loan of 9.5%, then 9.5%
is the before-tax cost of debt.✓✓ Correct answer Before-tax Cost of Debt
12. A financial statement that presents a company's financial position at a specific point in time.✓✓ Correct
answer Balance Sheet
, 13. Debt securities issued by corporations or governments to raise capital, where the issuer agrees to pay
back the principal along with interest on specified dates.✓✓ Correct answer Bonds
14. Literal value or face value.✓✓ Correct answer Book Value
15. The area of the business in which 1) financial measures are used to help management make decisions (ratio
analysis), 2) financial analysts use mathe-matical models to select what projects to invest in (capital budgeting),
and 3) financial analysts use the cost of capital to determine whether these projects should be financed with either
debt or equity, and which type of each.✓✓ Correct answer Business Finance
16. When a stock is bought at a lower price than what it is sold. Subtracting
the lower purchase price from the higher sales price is the appreciation.✓✓ Correct answer Capital Appreciation
17. The process by which businesses evaluate potential investments to de-termine if they are worth pursuing. It
assesses projected cash flows, costs, and returns of projects like new machinery or acquisitions to ensure efficient
resource allocation and profitability.✓✓ Correct answer Capital Budgeting
18. The mixture of debt and equity that a firm uses to finance the company.✓✓ Correct answer -
Capital Structure
19. A type of liquidity ratio that provides insight into a company's ability to pay off short-term liabilities with its
cash on hand. Cash Ratio = Cash ÷ Current Liabilities.✓✓ Correct answer Cash Ratio
20. A type of security that represents ownership in a corporation, granting shareholders voting rights and a claim
on a portion of the company's profits through dividends.✓✓ Correct answer Common Stock
21. The process of calculating how a sum of money grows over time as interest is added to both the initial principal
and accumulated interest. In the context of the time value of money, compounding is used to determine the future
value of a lump sum or a series of payments.✓✓ Correct answer Compound Interest
22. The number of times interest is applied to the principal balance of an invest-ment or loan within a specific period,
typically a year. Common compounding frequencies include annually, semiannually, quarterly, monthly, or daily.
The
