WGU C214 OA Financial Management Retake Exam Questions and Answers
(2022/2023) (Verified Answers)
1. What does the Foreign Corrupt Practices Act forbid U.S. companiesto do?
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further business deals.
2. What are two basic types of financial instruments?
Stocks and Bonds
3. What are secondary markets?
Secondary financial markets are where securities are traded after the initialoffering.
4. What do cash flows from operating activities report?
Operating – day to day operations
Investing – Property, plant, equipment, long term itemsFinancing – debt and
equity changes
5. What does the statement of cash flows report?
Cash inflow and cash outflow of business for period of time
6. Write the equation that links the income statement to the balance sheet?
,New Re= Old RE + Net Income – dividends
7.
Net income 2,000
Depreciation 500
Change in operating assets 400
Change in PPE 1,000
Change on long term liabilities 600
Dividends paid 100
What is the firm’s cash flow from financing activities? CFF
Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
8. Describe an income statement?
An income statement is a financial statement that shows you how profitable your business was overa given reporting period. It shows your
revenue, minus your expenses and losses
, 9. What item is included in the income statement and not included in thestatement of cash flows.
Depreciation
10.A company sold goods in 2016 for $30,000 and collected the cash in 2017. In 2016, the company incurred and
paid $20,000 in expenses related to the goods sold. How much income should the company report in 2016 under
the accrual basisof accounting?
30,000-20,000= $10,000
11. 11.
EBIT: $1,000,000
Depreciation: $30,000
Changein working capital($5,000) Net capital
expenditures: $10,000Tax rate: 40%
What is the company’s free cash flow?
1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
12.Define Free Cash Flow?
Represents the cash available for the company to repay creditors or pay dividends and interest toinvestor
13.A company reported an increase in accounts payable of $4,000 during the recent period. Half of this
amount is expected to be paid next period. What is theimpact on the cash flow from operating activities?
Increase of $4000
14.An architect will receive $10,000 per year (at the end of the year) PMT for 10 years. The annual interest earned
on the investment is 6%. What is the present value
of the architect’s investment?
10,000 PMT (at the end of each year)6 I/Y
10 N
CPT PV = -7360008705
15.An employee wants to retire 20 years from today and would like to have an annualincome of $300,000 per year for
10 years starting in exactly 20 years. The discount rate is 6%. What is the present value, today?
(2022/2023) (Verified Answers)
1. What does the Foreign Corrupt Practices Act forbid U.S. companiesto do?
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further business deals.
2. What are two basic types of financial instruments?
Stocks and Bonds
3. What are secondary markets?
Secondary financial markets are where securities are traded after the initialoffering.
4. What do cash flows from operating activities report?
Operating – day to day operations
Investing – Property, plant, equipment, long term itemsFinancing – debt and
equity changes
5. What does the statement of cash flows report?
Cash inflow and cash outflow of business for period of time
6. Write the equation that links the income statement to the balance sheet?
,New Re= Old RE + Net Income – dividends
7.
Net income 2,000
Depreciation 500
Change in operating assets 400
Change in PPE 1,000
Change on long term liabilities 600
Dividends paid 100
What is the firm’s cash flow from financing activities? CFF
Increase in debt 600 + (no change in stock) 0 – (dividends paid) 100 = 500
8. Describe an income statement?
An income statement is a financial statement that shows you how profitable your business was overa given reporting period. It shows your
revenue, minus your expenses and losses
, 9. What item is included in the income statement and not included in thestatement of cash flows.
Depreciation
10.A company sold goods in 2016 for $30,000 and collected the cash in 2017. In 2016, the company incurred and
paid $20,000 in expenses related to the goods sold. How much income should the company report in 2016 under
the accrual basisof accounting?
30,000-20,000= $10,000
11. 11.
EBIT: $1,000,000
Depreciation: $30,000
Changein working capital($5,000) Net capital
expenditures: $10,000Tax rate: 40%
What is the company’s free cash flow?
1,000,000*(1-.40) + 30,000) – (-5,000) – 10,000 = 625,000
12.Define Free Cash Flow?
Represents the cash available for the company to repay creditors or pay dividends and interest toinvestor
13.A company reported an increase in accounts payable of $4,000 during the recent period. Half of this
amount is expected to be paid next period. What is theimpact on the cash flow from operating activities?
Increase of $4000
14.An architect will receive $10,000 per year (at the end of the year) PMT for 10 years. The annual interest earned
on the investment is 6%. What is the present value
of the architect’s investment?
10,000 PMT (at the end of each year)6 I/Y
10 N
CPT PV = -7360008705
15.An employee wants to retire 20 years from today and would like to have an annualincome of $300,000 per year for
10 years starting in exactly 20 years. The discount rate is 6%. What is the present value, today?
