WGU C214 Quick Study for PA/OA (2025)/ Smaller set of
flashcards to help with studying core areas: Financial
environment Financial statement analysis Valua,on
skills Capital market theory Long-term investment
decisions Capital management Government regula,ons
What is a poten al nega ve consequence if a firm focuses only on profit maximiza on
Unethical behavior/scandals
How does a private company differ from a public company
Private companies are not publicly traded and keep business within their "family"
Why would a country devalue their currency
To make their exports cheaper
What are the two types of secondary financial markets
Auc on market
Dealer market
What is an auc on market (of the secondary financial market)
Auc on sells to highest bidder
Physical loca on
e.g. NYSE
What is a dealer market (of the secondary financial market)
Mul ple dealers holding an inventory of securi es and quote prices
Virtual, does not require physical loca on
e.g. NASDAQ
True or False: Efficient and well-developed financial markets enable more reliable stock prices
True
Explain why a company would have a net income of 100k but retained earnings only increased
20k
, The retained earnings were paid out as dividends to shareholders
What is retained earnings on the balance sheet
Accumulated earnings not paid out as dividends, they have been plowed back (retained)
True or False: Retained earnings can be used to pay company bills
False. It is not cash on the books and cannot be used to pay bills.
Why is deprecia on added back to net income when calcula ng CFO
It is a non-cash expense
What are opera ng accounts in the balance sheet
Increase or decrease in opera ng asset accounts
e.g. accounts receivable and inventory
Increase of decrease in opera ng liability accounts
e.g. accounts payable and accrued wages
What happens with CFO when assets increase, cash____________
Cash ou>low
What happens with CFO when liabili es increase, cash__________
Cash inflow
What does a statement of cash flow show an investor?
Cash flows from opera ng, inves ng, and financing ac vi es
What does it mean if a company has a CFO of $100, CFI of $50, CFF of $300
The company relied on external financing
What is the CFO indirect method?
The indirect method is a "boDom-up" approach where we start with net income and adjust for
differences between net income and CFO
What is "scrubbing the data" for ra o analysis
financial statements are comparable to the peer group
What are the steps to ra o analysis
flashcards to help with studying core areas: Financial
environment Financial statement analysis Valua,on
skills Capital market theory Long-term investment
decisions Capital management Government regula,ons
What is a poten al nega ve consequence if a firm focuses only on profit maximiza on
Unethical behavior/scandals
How does a private company differ from a public company
Private companies are not publicly traded and keep business within their "family"
Why would a country devalue their currency
To make their exports cheaper
What are the two types of secondary financial markets
Auc on market
Dealer market
What is an auc on market (of the secondary financial market)
Auc on sells to highest bidder
Physical loca on
e.g. NYSE
What is a dealer market (of the secondary financial market)
Mul ple dealers holding an inventory of securi es and quote prices
Virtual, does not require physical loca on
e.g. NASDAQ
True or False: Efficient and well-developed financial markets enable more reliable stock prices
True
Explain why a company would have a net income of 100k but retained earnings only increased
20k
, The retained earnings were paid out as dividends to shareholders
What is retained earnings on the balance sheet
Accumulated earnings not paid out as dividends, they have been plowed back (retained)
True or False: Retained earnings can be used to pay company bills
False. It is not cash on the books and cannot be used to pay bills.
Why is deprecia on added back to net income when calcula ng CFO
It is a non-cash expense
What are opera ng accounts in the balance sheet
Increase or decrease in opera ng asset accounts
e.g. accounts receivable and inventory
Increase of decrease in opera ng liability accounts
e.g. accounts payable and accrued wages
What happens with CFO when assets increase, cash____________
Cash ou>low
What happens with CFO when liabili es increase, cash__________
Cash inflow
What does a statement of cash flow show an investor?
Cash flows from opera ng, inves ng, and financing ac vi es
What does it mean if a company has a CFO of $100, CFI of $50, CFF of $300
The company relied on external financing
What is the CFO indirect method?
The indirect method is a "boDom-up" approach where we start with net income and adjust for
differences between net income and CFO
What is "scrubbing the data" for ra o analysis
financial statements are comparable to the peer group
What are the steps to ra o analysis
