WGU C214 Finance Management PVCC Exam Newest
2026/2027 Questions and Correct Detailed Answers
Already Graded A+
What is the total discretionary amount for the pro forma balance sheet? -
CORRECT ANSWER-$1.2 million
Which three pieces of data are needed to perform a capital budget analysis? -
CORRECT ANSWER-The initial cost of the new project
Annual cash flows for the life of the new project
Cash flow when the firm terminates the project
What are two examples of sunk costs? - CORRECT ANSWER-The cost of a
market study conducted prior to the decision
The cost of feasibility consulting incurred before the decision point
Company A has a degree of operating leverage of 1.85 and Company B has a
degree of operating leverage of 6.5.
,What does the degree of operating leverage say about the two companies? -
CORRECT ANSWER-Company A must have a lower increase in sales than
Company B to achieve the same operating income
Which action is an important part of managing accounts receivable? - CORRECT
ANSWER-Setting credit terms
What is the main benefit associated with holding inventory? - CORRECT
ANSWER-It makes it possible to meet the demands of customers
A person needs to determine the cost o replace a company's property, plant, and
equipment using the replacement cost method.
Which value does this person need to consider in order to make this
determination? - CORRECT ANSWER-Market value
Which type of investment will a risk-averse investor most likely invest in? -
CORRECT ANSWER-Index funds
Company Y has a greater degree of financial risk than Company Z.
, What will happen if there is a 1% decrease in EBT for both companies? -
CORRECT ANSWER-It will result in a greater percentage in Company Y's per-tax
profit
How does the anticipation of bankruptcy affect a firm's capital structure? -
CORRECT ANSWER-A firm facing bankruptcy will reduce debt to avoid
associated high levels of bankruptcy costs
Why would a company prefer to raise capital by issuing debt instead of issuing
new equity? - CORRECT ANSWER-Debt financing provides interest tax benefits
Which hybrid security system has special claims on a corporations profits or, in
case of liquidation, corporate assets? - CORRECT ANSWER-Preferred Stock
How will an increase in corporate tax rates affect a firm's cost of capital? -
CORRECT ANSWER-The cost of debt will increase
Which financial ratio is used to measure a company effectiveness in extending
credit as well as collecting debts? - CORRECT ANSWER-AR turnover
2026/2027 Questions and Correct Detailed Answers
Already Graded A+
What is the total discretionary amount for the pro forma balance sheet? -
CORRECT ANSWER-$1.2 million
Which three pieces of data are needed to perform a capital budget analysis? -
CORRECT ANSWER-The initial cost of the new project
Annual cash flows for the life of the new project
Cash flow when the firm terminates the project
What are two examples of sunk costs? - CORRECT ANSWER-The cost of a
market study conducted prior to the decision
The cost of feasibility consulting incurred before the decision point
Company A has a degree of operating leverage of 1.85 and Company B has a
degree of operating leverage of 6.5.
,What does the degree of operating leverage say about the two companies? -
CORRECT ANSWER-Company A must have a lower increase in sales than
Company B to achieve the same operating income
Which action is an important part of managing accounts receivable? - CORRECT
ANSWER-Setting credit terms
What is the main benefit associated with holding inventory? - CORRECT
ANSWER-It makes it possible to meet the demands of customers
A person needs to determine the cost o replace a company's property, plant, and
equipment using the replacement cost method.
Which value does this person need to consider in order to make this
determination? - CORRECT ANSWER-Market value
Which type of investment will a risk-averse investor most likely invest in? -
CORRECT ANSWER-Index funds
Company Y has a greater degree of financial risk than Company Z.
, What will happen if there is a 1% decrease in EBT for both companies? -
CORRECT ANSWER-It will result in a greater percentage in Company Y's per-tax
profit
How does the anticipation of bankruptcy affect a firm's capital structure? -
CORRECT ANSWER-A firm facing bankruptcy will reduce debt to avoid
associated high levels of bankruptcy costs
Why would a company prefer to raise capital by issuing debt instead of issuing
new equity? - CORRECT ANSWER-Debt financing provides interest tax benefits
Which hybrid security system has special claims on a corporations profits or, in
case of liquidation, corporate assets? - CORRECT ANSWER-Preferred Stock
How will an increase in corporate tax rates affect a firm's cost of capital? -
CORRECT ANSWER-The cost of debt will increase
Which financial ratio is used to measure a company effectiveness in extending
credit as well as collecting debts? - CORRECT ANSWER-AR turnover
