WGU C214 Finance Management PVCC questions with
verified answers
A bond that matures in 30 months is sold at a premium.
What is the yield to maturity (YTM)? Ans✓✓✓ Lower than the coupon rate
A company reported an increase in accounts receivable of $5,000 during the
recent period. Half of this amount is expected to be collected next period.
How will this change in accounts receivable affect the cash flows from the
operating activities section? Ans✓✓✓ The change will decrease cash flows from
operations by $5,000
A firm has a ROE of 0.27 and the industry average ROE is 0.24
Which conclusion would an analyst draw when comparing the firm to the
industry? Ans✓✓✓ The firm is generating higher returns to owners than the
industry
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? Ans✓✓✓ Market value
, An analyst is comparing the ratios of two different firms and needs to address
timing differences.
What would be considered an example of a timing difference between the two
firms? Ans✓✓✓ The firms have different fiscal years
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?
Ans✓✓✓ Company A must have a lower increase in sales than Company B to
achieve the same operating income
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? Ans✓✓✓
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?
Ans✓✓✓ A firm facing bankruptcy will reduce debt to avoid associated high
levels of bankruptcy costs
How does the Securities Exchange Commission (SEC) regulate the financial
industry? Ans✓✓✓ By requiring public disclosure of information about entities
that sell public equity or debt
verified answers
A bond that matures in 30 months is sold at a premium.
What is the yield to maturity (YTM)? Ans✓✓✓ Lower than the coupon rate
A company reported an increase in accounts receivable of $5,000 during the
recent period. Half of this amount is expected to be collected next period.
How will this change in accounts receivable affect the cash flows from the
operating activities section? Ans✓✓✓ The change will decrease cash flows from
operations by $5,000
A firm has a ROE of 0.27 and the industry average ROE is 0.24
Which conclusion would an analyst draw when comparing the firm to the
industry? Ans✓✓✓ The firm is generating higher returns to owners than the
industry
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? Ans✓✓✓ Market value
, An analyst is comparing the ratios of two different firms and needs to address
timing differences.
What would be considered an example of a timing difference between the two
firms? Ans✓✓✓ The firms have different fiscal years
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?
Ans✓✓✓ Company A must have a lower increase in sales than Company B to
achieve the same operating income
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? Ans✓✓✓
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?
Ans✓✓✓ A firm facing bankruptcy will reduce debt to avoid associated high
levels of bankruptcy costs
How does the Securities Exchange Commission (SEC) regulate the financial
industry? Ans✓✓✓ By requiring public disclosure of information about entities
that sell public equity or debt
