Wgu Finance D076 questions with verified answers
A company is developing a financial forecast for the next year. The company plans
to implement a new factory that will increase production and resulting sales by
20%.
Since the company's assets are increasing significantly, what else must increase?
Ans✓✓✓-Financing
A financial manager at a company is trying to determine whether to issue new
bonds or new stocks to cover the cost of a project the company is doing next year.
Which main task in business finance is this situation as example of? Ans✓✓✓-
Making financing decisions
A sign company is planning to have an initial public offering (IPO). In which type of
market will its stock first be sold to the public? Ans✓✓✓-Primary market
Activity ratio Ans✓✓✓-financial ratio used to measure how well the company
uses its assets to generate sales or cash—the firm's operational efficiency and
profitability.
Activity ratios help evaluate a business's operating efficiency by analyzing what?
Ans✓✓✓-inventories, fixed assets, and accounts receivables
An investment analyst is concerned about a construction company's ability to sell
its inventory to meet current obligations, because much of the inventory
(commercial buildings) it builds and sells takes longer than a year to construct.
Which ratio should this analyst use to consider the effect of the firm's inventory
on the firm's ability to meet current obligations? Ans✓✓✓-Quick ratio
, An investor is analyzing a portfolio to decide if there are any stocks that should be
removed from the pool of financial securities. Quiet Flag Industries, a company
the investor has invested in, has just released its annual report.
Which method should the investor use to see if the company has improved?
Ans✓✓✓-Trend analysis
Anna is planning to invest in some company stocks for retirement and is trying to
figure out if the stocks are a good buy. She calculates the intrinsic value of one of
the stocks, Quiet Flag Industries, to be $35. The stock is currently trading on the
market for $30, so she decides to buy it. Why was it a good idea for Anna to buy
this stock? Ans✓✓✓-The stock is undervalued.
Based on the following information about the stocks of several companies, which
stock displays the greatest amount of risk?
Stock A: Return = 22.22%, Standard Deviation = 9.99%
Stock B: Return = 15.05%, Standard Deviation = 7.35%
Stock C: Return = 38.83%, Standard Deviation = 4.54%
Stock D: Return = 5.69%, Standard Deviation = 5.32% Ans✓✓✓-Stock A
Cross-Sectional Analysis Ans✓✓✓-compares a firm's financial ratios with those of
a peer group.
Freedom Rock Bicycles has a sales capacity of $10 million. When sales exceed this
capacity, the company must invest $200,000 in new equipment. Freedom Rock
Bicycles had sales of $9 million in one year, and it projects a sales growth of 10%.
The net fixed assets in the year were $500,000.
By how much will the company's discretionary financing need increase?
Ans✓✓✓-$0
A company is developing a financial forecast for the next year. The company plans
to implement a new factory that will increase production and resulting sales by
20%.
Since the company's assets are increasing significantly, what else must increase?
Ans✓✓✓-Financing
A financial manager at a company is trying to determine whether to issue new
bonds or new stocks to cover the cost of a project the company is doing next year.
Which main task in business finance is this situation as example of? Ans✓✓✓-
Making financing decisions
A sign company is planning to have an initial public offering (IPO). In which type of
market will its stock first be sold to the public? Ans✓✓✓-Primary market
Activity ratio Ans✓✓✓-financial ratio used to measure how well the company
uses its assets to generate sales or cash—the firm's operational efficiency and
profitability.
Activity ratios help evaluate a business's operating efficiency by analyzing what?
Ans✓✓✓-inventories, fixed assets, and accounts receivables
An investment analyst is concerned about a construction company's ability to sell
its inventory to meet current obligations, because much of the inventory
(commercial buildings) it builds and sells takes longer than a year to construct.
Which ratio should this analyst use to consider the effect of the firm's inventory
on the firm's ability to meet current obligations? Ans✓✓✓-Quick ratio
, An investor is analyzing a portfolio to decide if there are any stocks that should be
removed from the pool of financial securities. Quiet Flag Industries, a company
the investor has invested in, has just released its annual report.
Which method should the investor use to see if the company has improved?
Ans✓✓✓-Trend analysis
Anna is planning to invest in some company stocks for retirement and is trying to
figure out if the stocks are a good buy. She calculates the intrinsic value of one of
the stocks, Quiet Flag Industries, to be $35. The stock is currently trading on the
market for $30, so she decides to buy it. Why was it a good idea for Anna to buy
this stock? Ans✓✓✓-The stock is undervalued.
Based on the following information about the stocks of several companies, which
stock displays the greatest amount of risk?
Stock A: Return = 22.22%, Standard Deviation = 9.99%
Stock B: Return = 15.05%, Standard Deviation = 7.35%
Stock C: Return = 38.83%, Standard Deviation = 4.54%
Stock D: Return = 5.69%, Standard Deviation = 5.32% Ans✓✓✓-Stock A
Cross-Sectional Analysis Ans✓✓✓-compares a firm's financial ratios with those of
a peer group.
Freedom Rock Bicycles has a sales capacity of $10 million. When sales exceed this
capacity, the company must invest $200,000 in new equipment. Freedom Rock
Bicycles had sales of $9 million in one year, and it projects a sales growth of 10%.
The net fixed assets in the year were $500,000.
By how much will the company's discretionary financing need increase?
Ans✓✓✓-$0
