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WGU D775 Intro to Business Finance OA EXAM
Questions and Answers | 2026 Update | 100% Correct.
Accounts Receivable (A/R) Turnover - RESOLUTION RESULT VERIFIED ANSWERS-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.
Activity Ratios - RESOLUTION RESULT VERIFIED ANSWERS-A type of financial ratio
that evaluates how efficiently a firm utilizes its assets to generate sales or revenue; also
known as efficiency ratios.
After-tax Cost of Debt - RESOLUTION RESULT VERIFIED ANSWERS-An adjustment of
the before-tax cost of debt that considers the tax deductions on interest expenses. It
reflects the actual cost to a firm for debt financing after benefiting from tax breaks.
Agency Costs - RESOLUTION RESULT VERIFIED ANSWERS-Costs that are incurred by
the firm when management and employees of a company do not act in the best interests
of shareholders.
Agency Problem - RESOLUTION RESULT VERIFIED ANSWERS-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.
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Annual Interest Rate - RESOLUTION RESULT VERIFIED ANSWERS-The annualized cost
of borrowing or the yearly interest rate charged on a loan or credit balance. Also known
as annual percentage rate (APR).
Annuity - RESOLUTION RESULT VERIFIED ANSWERS-A financial arrangement in which
a series of equal payments is made or received at regular intervals over a specified
period of time.
Assets - RESOLUTION RESULT VERIFIED ANSWERS-Resources owned by the company
that have economic value.
Auction Markets - RESOLUTION RESULT VERIFIED ANSWERS-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.
Average Collection Period - RESOLUTION RESULT VERIFIED ANSWERS-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.
Before-tax Cost of Debt - RESOLUTION RESULT VERIFIED ANSWERS-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 beforetax cost of debt.
Balance Sheet - RESOLUTION RESULT VERIFIED ANSWERS-A financial statement that
presents a company's financial position at a specific point in time.
Bonds - RESOLUTION RESULT VERIFIED ANSWERS-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.
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Book Value - RESOLUTION RESULT VERIFIED ANSWERS-Literal value or face value.
Business Finance - RESOLUTION RESULT VERIFIED ANSWERS-The area of the
business in which 1) financial measures are used to help management make decisions
(ratio analysis), 2) financial analysts use mathematical 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.
Capital Appreciation - RESOLUTION RESULT VERIFIED ANSWERS-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.
Capital Budgeting - RESOLUTION RESULT VERIFIED ANSWERS-The process by which
businesses evaluate potential investments to determine 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.
Capital Structure - RESOLUTION RESULT VERIFIED ANSWERS-The mixture of debt and
equity that a firm uses to finance the company.
Cash Ratio - RESOLUTION RESULT VERIFIED ANSWERS-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.
Common Stock - RESOLUTION RESULT VERIFIED ANSWERS-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.
WGU D775 Intro to Business Finance OA EXAM
Questions and Answers | 2026 Update | 100% Correct.
Accounts Receivable (A/R) Turnover - RESOLUTION RESULT VERIFIED ANSWERS-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.
Activity Ratios - RESOLUTION RESULT VERIFIED ANSWERS-A type of financial ratio
that evaluates how efficiently a firm utilizes its assets to generate sales or revenue; also
known as efficiency ratios.
After-tax Cost of Debt - RESOLUTION RESULT VERIFIED ANSWERS-An adjustment of
the before-tax cost of debt that considers the tax deductions on interest expenses. It
reflects the actual cost to a firm for debt financing after benefiting from tax breaks.
Agency Costs - RESOLUTION RESULT VERIFIED ANSWERS-Costs that are incurred by
the firm when management and employees of a company do not act in the best interests
of shareholders.
Agency Problem - RESOLUTION RESULT VERIFIED ANSWERS-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.
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Annual Interest Rate - RESOLUTION RESULT VERIFIED ANSWERS-The annualized cost
of borrowing or the yearly interest rate charged on a loan or credit balance. Also known
as annual percentage rate (APR).
Annuity - RESOLUTION RESULT VERIFIED ANSWERS-A financial arrangement in which
a series of equal payments is made or received at regular intervals over a specified
period of time.
Assets - RESOLUTION RESULT VERIFIED ANSWERS-Resources owned by the company
that have economic value.
Auction Markets - RESOLUTION RESULT VERIFIED ANSWERS-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.
Average Collection Period - RESOLUTION RESULT VERIFIED ANSWERS-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.
Before-tax Cost of Debt - RESOLUTION RESULT VERIFIED ANSWERS-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 beforetax cost of debt.
Balance Sheet - RESOLUTION RESULT VERIFIED ANSWERS-A financial statement that
presents a company's financial position at a specific point in time.
Bonds - RESOLUTION RESULT VERIFIED ANSWERS-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.
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Book Value - RESOLUTION RESULT VERIFIED ANSWERS-Literal value or face value.
Business Finance - RESOLUTION RESULT VERIFIED ANSWERS-The area of the
business in which 1) financial measures are used to help management make decisions
(ratio analysis), 2) financial analysts use mathematical 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.
Capital Appreciation - RESOLUTION RESULT VERIFIED ANSWERS-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.
Capital Budgeting - RESOLUTION RESULT VERIFIED ANSWERS-The process by which
businesses evaluate potential investments to determine 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.
Capital Structure - RESOLUTION RESULT VERIFIED ANSWERS-The mixture of debt and
equity that a firm uses to finance the company.
Cash Ratio - RESOLUTION RESULT VERIFIED ANSWERS-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.
Common Stock - RESOLUTION RESULT VERIFIED ANSWERS-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.
