WGU C214 OA FINANCIAL MANAGEMENT
RETAKE EXAM | COMPLETE STUDY GUIDE
2026/2027 | VERIFIED ANSWERS | 100%
CORRECT | GRADED A+ | PASS
GUARANTEED | LATEST UPDATE
What are the issues with understanding foreign financial statements? -
ANSWER Foreign financial statements use international financial reporting
standards, and they are different from US accounting standards
What does cash flow from investing activities measure? - ANSWER It
measures investments in long-term assets such as buildings, equipment, and
machinery
What does the efficient frontier measure? - ANSWER It maximizes expected
return for a given level of risk
What is the objective of portfolio diversification? - ANSWER The objective is
to reduce risk
What is the definition of a current asset and a current liability? - ANSWER A
current asset is cash or any other asset that can be converted to cash within 12
months, and a current liability is any liability that has to be paid within 12 months
,What is a differential cash flow? - ANSWER It is the amount of net cash flow
generated by a new asset on a yearly basis
What does the current ratio measure? - ANSWER It is a measure of short-term
liquidity to pay short-term obligations
How does a credit rating impact the cost of capital? - ANSWER A rating
downgrade will increase the cost of capital
What is one of the roles of the SEC? - ANSWER It regulates public disclosures
of entities that sell debt and equity to the public
What leads to an increase in APY? - ANSWER An increase in the frequency of
compounding - like going from annual to monthly compounding
What bonds are taxed at the federal level? - ANSWER Treasury bonds
What bonds are not taxed at the federal level? - ANSWER Municipal bonds
What are the two benefits of unbundling and offshoring? - ANSWER It reduces
costs and results in higher sales and employment. It allows for the sale of
intermediate and final goods at lower prices and increases employment
What are the two basic types of financial instruments? - ANSWER Stocks and
bonds
,What are primary and secondary markets? - ANSWER Primary markets are
where companies directly sell securities to investors, and secondary markets are
where bought and sold from third parties like the New York Stock Exchange
Dodd-Frank regulates which segment of the US Economy? -
ANSWER Banking industry
What does the Sarbanes-Oxley Act require companies to do? - ANSWER Have
internal control audits
What would be considered a cash outflow in the investing section of the statement
of cash flows? - ANSWER Purchase of equipment
What is Net Present Value? - ANSWER The present value of after tax net cash
flows and is the most commonly used method in Capital Budgeting
Internal Rate of Return - ANSWER Defined as the discount rate that results in a
Zero Net Present Value
What does inflation do to the value of cash flows? - ANSWER It lowers the
value of cash flows
What does Free Cash Flow equal? - ANSWER Cash flow from Operations -
Change in Net working capital - Investment in PPE
, What does the degree of financial leverage indicate? - ANSWER The reliance
on debt
What is the degree of operating risk also known as? - ANSWER Business Risk
What should a company do to manage its working capital? - ANSWER Collect
quickly and pay slowly
How can a firm speed up collections? - ANSWER Offer discounts to pay early
and electronic check processing
What ratio is used to measure short-term liquidity? - ANSWER Current ratio
measures short-term liquidity for a firm
When will ROE be greater than ROA? - ANSWER The company has debt and
uses the interest expense to reduce its taxes
Market Rate = Coupon Rate - ANSWER Bonds will sell at par value
Market Rate > Coupon Rate - ANSWER Bonds will sell at a discount
Market Rate < Coupon Rate - ANSWER Bonds will sell at a premium
Discretionary Financing Needed equals? - ANSWER Projected Total Assets -
Projected Total Liabilities - Projected Equity
RETAKE EXAM | COMPLETE STUDY GUIDE
2026/2027 | VERIFIED ANSWERS | 100%
CORRECT | GRADED A+ | PASS
GUARANTEED | LATEST UPDATE
What are the issues with understanding foreign financial statements? -
ANSWER Foreign financial statements use international financial reporting
standards, and they are different from US accounting standards
What does cash flow from investing activities measure? - ANSWER It
measures investments in long-term assets such as buildings, equipment, and
machinery
What does the efficient frontier measure? - ANSWER It maximizes expected
return for a given level of risk
What is the objective of portfolio diversification? - ANSWER The objective is
to reduce risk
What is the definition of a current asset and a current liability? - ANSWER A
current asset is cash or any other asset that can be converted to cash within 12
months, and a current liability is any liability that has to be paid within 12 months
,What is a differential cash flow? - ANSWER It is the amount of net cash flow
generated by a new asset on a yearly basis
What does the current ratio measure? - ANSWER It is a measure of short-term
liquidity to pay short-term obligations
How does a credit rating impact the cost of capital? - ANSWER A rating
downgrade will increase the cost of capital
What is one of the roles of the SEC? - ANSWER It regulates public disclosures
of entities that sell debt and equity to the public
What leads to an increase in APY? - ANSWER An increase in the frequency of
compounding - like going from annual to monthly compounding
What bonds are taxed at the federal level? - ANSWER Treasury bonds
What bonds are not taxed at the federal level? - ANSWER Municipal bonds
What are the two benefits of unbundling and offshoring? - ANSWER It reduces
costs and results in higher sales and employment. It allows for the sale of
intermediate and final goods at lower prices and increases employment
What are the two basic types of financial instruments? - ANSWER Stocks and
bonds
,What are primary and secondary markets? - ANSWER Primary markets are
where companies directly sell securities to investors, and secondary markets are
where bought and sold from third parties like the New York Stock Exchange
Dodd-Frank regulates which segment of the US Economy? -
ANSWER Banking industry
What does the Sarbanes-Oxley Act require companies to do? - ANSWER Have
internal control audits
What would be considered a cash outflow in the investing section of the statement
of cash flows? - ANSWER Purchase of equipment
What is Net Present Value? - ANSWER The present value of after tax net cash
flows and is the most commonly used method in Capital Budgeting
Internal Rate of Return - ANSWER Defined as the discount rate that results in a
Zero Net Present Value
What does inflation do to the value of cash flows? - ANSWER It lowers the
value of cash flows
What does Free Cash Flow equal? - ANSWER Cash flow from Operations -
Change in Net working capital - Investment in PPE
, What does the degree of financial leverage indicate? - ANSWER The reliance
on debt
What is the degree of operating risk also known as? - ANSWER Business Risk
What should a company do to manage its working capital? - ANSWER Collect
quickly and pay slowly
How can a firm speed up collections? - ANSWER Offer discounts to pay early
and electronic check processing
What ratio is used to measure short-term liquidity? - ANSWER Current ratio
measures short-term liquidity for a firm
When will ROE be greater than ROA? - ANSWER The company has debt and
uses the interest expense to reduce its taxes
Market Rate = Coupon Rate - ANSWER Bonds will sell at par value
Market Rate > Coupon Rate - ANSWER Bonds will sell at a discount
Market Rate < Coupon Rate - ANSWER Bonds will sell at a premium
Discretionary Financing Needed equals? - ANSWER Projected Total Assets -
Projected Total Liabilities - Projected Equity
