WGU D076 Test Answers
A company calculated variances of a budget and actual cash flows that indicate
the firm's strengths and weaknesses in cash flows and its budgeting process.
Which major use of cash budgeting is this an example of?
Standardization
Assessment of future needs
Corrective action
Performance evaluation Ans✓✓✓-Performance evaluation
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?
Profit turnover
Accounts receivable turnover
Financing
Gross margin Ans✓✓✓-Financing
A financial manager at a company is trying to determine whether to issue new
stocks or new bonds to cover the costs of a project the company is doing the next
year.
Which main task in business finance is this situation an example of?
Making financing decisions
Making investment decisions
Managing interdepartmental loans Ans✓✓✓-Making financing decisions
, A firm is currently operating at 75% capacity with current sales of $34 million.
Will the firm need to acquire additional fixed assets if its sales are predicted to
increase by $6 million next year?
No, because the increase in sales will exceed the firm's sales capacity.
Yes, because the increase in sales will exceed the firm's sales capacity.
Correct
No, because the increase in sales will not exceed the firm's sales capacity.
Ans✓✓✓-No, because the increase in sales will not exceed the firm's sales
capacity.
A pharmaceutical company recently spent $2 million developing a new drug. The
company then conducts capital budgeting analysis to determine if it should
produce the newly developed drug. The net present value (NPV) of the project is
$1.5 million.
Why should this company produce the drug?
Because the project will provide a total value of $3.5 million to the company
Because the NPV is greater than zero
Because the development costs are greater than the value of the project
Ans✓✓✓-Because the NPV is greater than zero
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?
Efficient market
Secondary market
Money market
Primary market Ans✓✓✓-Primary market
A company calculated variances of a budget and actual cash flows that indicate
the firm's strengths and weaknesses in cash flows and its budgeting process.
Which major use of cash budgeting is this an example of?
Standardization
Assessment of future needs
Corrective action
Performance evaluation Ans✓✓✓-Performance evaluation
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?
Profit turnover
Accounts receivable turnover
Financing
Gross margin Ans✓✓✓-Financing
A financial manager at a company is trying to determine whether to issue new
stocks or new bonds to cover the costs of a project the company is doing the next
year.
Which main task in business finance is this situation an example of?
Making financing decisions
Making investment decisions
Managing interdepartmental loans Ans✓✓✓-Making financing decisions
, A firm is currently operating at 75% capacity with current sales of $34 million.
Will the firm need to acquire additional fixed assets if its sales are predicted to
increase by $6 million next year?
No, because the increase in sales will exceed the firm's sales capacity.
Yes, because the increase in sales will exceed the firm's sales capacity.
Correct
No, because the increase in sales will not exceed the firm's sales capacity.
Ans✓✓✓-No, because the increase in sales will not exceed the firm's sales
capacity.
A pharmaceutical company recently spent $2 million developing a new drug. The
company then conducts capital budgeting analysis to determine if it should
produce the newly developed drug. The net present value (NPV) of the project is
$1.5 million.
Why should this company produce the drug?
Because the project will provide a total value of $3.5 million to the company
Because the NPV is greater than zero
Because the development costs are greater than the value of the project
Ans✓✓✓-Because the NPV is greater than zero
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?
Efficient market
Secondary market
Money market
Primary market Ans✓✓✓-Primary market
