WGU D775 EXAMS SET 2026 FULL
QUESTIONS AND ANSWERS GRADED A+.
◍ Activity Ratios.Answer: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.Answer: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.Answer: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.Answer: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.
◍ Annual Interest Rate.Answer: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.Answer:A financial arrangement in which a series of equal
payments is made or received at regular intervals over a specified
period of time.
,◍ Assets.Answer:Resources owned by the company that have
economic value.
◍ Auction Markets.Answer: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.Answer: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.
◍ Balance Sheet.Answer:A financial statement that presents a
company's financial position at a specific point in time.
◍ Before-tax Cost of Debt.Answer: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.
◍ Board of Directors (BOD).Answer:A group of individuals elected
by a company's shareholders to oversee the management and make
key decisions on corporate policies and strategy.
◍ Bonds.Answer: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.
, ◍ Book Value.Answer:Literal value or face value.
◍ Business Finance.Answer: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.Answer: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.Answer: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.Answer:The mixture of debt and equity that a
firm uses to finance the company.
◍ Cash Ratio.Answer: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.
QUESTIONS AND ANSWERS GRADED A+.
◍ Activity Ratios.Answer: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.Answer: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.Answer: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.Answer: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.
◍ Annual Interest Rate.Answer: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.Answer:A financial arrangement in which a series of equal
payments is made or received at regular intervals over a specified
period of time.
,◍ Assets.Answer:Resources owned by the company that have
economic value.
◍ Auction Markets.Answer: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.Answer: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.
◍ Balance Sheet.Answer:A financial statement that presents a
company's financial position at a specific point in time.
◍ Before-tax Cost of Debt.Answer: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.
◍ Board of Directors (BOD).Answer:A group of individuals elected
by a company's shareholders to oversee the management and make
key decisions on corporate policies and strategy.
◍ Bonds.Answer: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.
, ◍ Book Value.Answer:Literal value or face value.
◍ Business Finance.Answer: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.Answer: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.Answer: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.Answer:The mixture of debt and equity that a
firm uses to finance the company.
◍ Cash Ratio.Answer: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.
