WGU D076 FINANCE SKILLS FOR
MANAGERS COMPLETE EXAM REVIEW
WITH FULL SOLUTIONS
●● Accounts Receivable Turnover (AR Turnover)
Answer: An activity ratio found by credit sales divided by accounts
receivable.
credit sales/accounts receivable
●● Activity Ratios
Answer: A category of ratios that measure how well a company uses its
assets to generate sales or cash, showing the firm's operational efficiency
and profitability.
●● Additional Funds Needed (AFN)
Answer: Another name for the discretionary financing needed or
external financing needed. It represents the additional financing needed
given a firm's expectations for future growth.
●● Affirmative Covenants
Answer: A bond covenant that describes things the company pledges
itself to do in order to protect bondholders.
,●● Agency Costs
Answer: Costs that are incurred when management does not act in the
best interest of shareholders
●● Agency Problem
Answer: When the agent (the management) does not act in the best
interest of the principal (the owners)
●● Aggressive Assets
Answer: Companies or securities with beta greater than 1.
●● Annual Percentage Rate (APR)
Answer: The annual interest rate that is charged for borrowing money or
that is earned through investment.
●● Annuity
Answer: A stream of cash flows of an equal amount paid every
consecutive period.
●● Annuity Due
Answer: A series of equal payments made at the beginning of
consecutive periods.
,●● Asset pricing
Answer: The process of valuing assets.
●● Auction Market
Answer: A secondary market with a physical location and where prices
are determined by investors' willingness to pay
●● Average Collection Period (ACP)
Answer: an activity ratio found by the number of days in a Year (365)
divided by AR turnover.
365/AR turnover
●● Balance Sheet Forecasting
Answer: Using sales growth and the profit forecast to construct a pro
forma balance sheet to understand the future implications of the sources
and uses of finances.
●● Banks and Credit Unions
Answer: Receive deposits and extend loans to individuals and
businesses.
●● Benchmarking
Answer: The process of completing a financial analysis to compare a
firm's financial performance to that of other similar firms.
, ●● Beta
Answer: A variable that describes how the price of a security varies with
the market.
●● Bid-ask Spread
Answer: The difference between the bid and ask prices that compensate
the specialist for the risk that he or she bears for willingness to provide
liquidity.
●● Board of Directors
Answer: A group of people who jointly supervise the activities of an
organization.
●● Bond Indenture
Answer: A legal contract that governs the relationship between a firm
and its bondholders.
●● Bondholders
Answer: A person who loans a corporation money by buying debt
securities.
●● Business Finance
MANAGERS COMPLETE EXAM REVIEW
WITH FULL SOLUTIONS
●● Accounts Receivable Turnover (AR Turnover)
Answer: An activity ratio found by credit sales divided by accounts
receivable.
credit sales/accounts receivable
●● Activity Ratios
Answer: A category of ratios that measure how well a company uses its
assets to generate sales or cash, showing the firm's operational efficiency
and profitability.
●● Additional Funds Needed (AFN)
Answer: Another name for the discretionary financing needed or
external financing needed. It represents the additional financing needed
given a firm's expectations for future growth.
●● Affirmative Covenants
Answer: A bond covenant that describes things the company pledges
itself to do in order to protect bondholders.
,●● Agency Costs
Answer: Costs that are incurred when management does not act in the
best interest of shareholders
●● Agency Problem
Answer: When the agent (the management) does not act in the best
interest of the principal (the owners)
●● Aggressive Assets
Answer: Companies or securities with beta greater than 1.
●● Annual Percentage Rate (APR)
Answer: The annual interest rate that is charged for borrowing money or
that is earned through investment.
●● Annuity
Answer: A stream of cash flows of an equal amount paid every
consecutive period.
●● Annuity Due
Answer: A series of equal payments made at the beginning of
consecutive periods.
,●● Asset pricing
Answer: The process of valuing assets.
●● Auction Market
Answer: A secondary market with a physical location and where prices
are determined by investors' willingness to pay
●● Average Collection Period (ACP)
Answer: an activity ratio found by the number of days in a Year (365)
divided by AR turnover.
365/AR turnover
●● Balance Sheet Forecasting
Answer: Using sales growth and the profit forecast to construct a pro
forma balance sheet to understand the future implications of the sources
and uses of finances.
●● Banks and Credit Unions
Answer: Receive deposits and extend loans to individuals and
businesses.
●● Benchmarking
Answer: The process of completing a financial analysis to compare a
firm's financial performance to that of other similar firms.
, ●● Beta
Answer: A variable that describes how the price of a security varies with
the market.
●● Bid-ask Spread
Answer: The difference between the bid and ask prices that compensate
the specialist for the risk that he or she bears for willingness to provide
liquidity.
●● Board of Directors
Answer: A group of people who jointly supervise the activities of an
organization.
●● Bond Indenture
Answer: A legal contract that governs the relationship between a firm
and its bondholders.
●● Bondholders
Answer: A person who loans a corporation money by buying debt
securities.
●● Business Finance
