WGU C214 OA Financial Management Retake Exam
Latest Questions and Answers ()
(Verified Answers)
1. What does the Foreign Corrupt Practices Act forbid U.S. companies to
,/ ,/ ,/ ,/ ,/ ,/ ,/ , / ,/ ,/
do?
,/
Prohibits U.S. firms and individuals from paying bribes to foreign officials to further business deals.
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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 initial offering.
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4. What do cash flows from operating activities report?
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Operating – day to day operations ,/ ,/ ,/ ,/ ,/
Investing–Property,plant,equipment,longtermitems
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,/ Financing – debt and equity changes ,/ ,/ ,/ ,/ ,/
5. What does the statement of cash flows report?
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Cash inflow and cashoutflowofbusinessforperiod oftime
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6. Write the equation that links the income statement to the balance sheet?
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New Re= Old RE + Net Income – dividends
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7.
Net income
,/ 2,000
Depreciation 500
Changeinoperatingassets ,/ ,/ ,/ 400
Change inPPE ,/ ,/ 1,000
Changeonlongterm 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
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8. Describe an income statement? , / , / , /
An income statement is a financial statement that shows you how profitable your business was over a
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
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 the
,/ , / ,/ , / ,/ ,/ ,/ , / ,/ ,/ , / ,/
statement 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 basis of accounting?
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ , / ,/
30,000-20,000= $10,000 ,/
11. 11.
EBIT: $1,000,000 , /
Depreciation: $30,000 , /
Changein working capital($5,000) ,/ ,/
Net capital expenditures: $10,000
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Tax 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 to investor ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
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 the impact 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 annual
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
income of $300,000 per year for 10 years starting in exactly 20 years. The discount
,/ , / ,/ , / , / , / , / ,/ ,/ , / ,/ , / ,/ , / ,/
rate is 6%. What is the present value, today?
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
Latest Questions and Answers ()
(Verified Answers)
1. What does the Foreign Corrupt Practices Act forbid U.S. companies to
,/ ,/ ,/ ,/ ,/ ,/ ,/ , / ,/ ,/
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 initial offering.
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
4. What do cash flows from operating activities report?
, / , / , / ,/ ,/ , / , /
Operating – day to day operations ,/ ,/ ,/ ,/ ,/
Investing–Property,plant,equipment,longtermitems
,/ ,/ ,/ ,/ ,/ ,/ ,/
,/ Financing – debt and equity changes ,/ ,/ ,/ ,/ ,/
5. What does the statement of cash flows report?
, / ,/ , / , / ,/ , / , /
Cash inflow and cashoutflowofbusinessforperiod oftime
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
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
Changeinoperatingassets ,/ ,/ ,/ 400
Change inPPE ,/ ,/ 1,000
Changeonlongterm 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 over a
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
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 the
,/ , / ,/ , / ,/ ,/ ,/ , / ,/ ,/ , / ,/
statement 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 basis of accounting?
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ , / ,/
30,000-20,000= $10,000 ,/
11. 11.
EBIT: $1,000,000 , /
Depreciation: $30,000 , /
Changein working capital($5,000) ,/ ,/
Net capital expenditures: $10,000
,/ ,/ ,/ ,/
Tax 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 to investor ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
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 the impact 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 annual
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
income of $300,000 per year for 10 years starting in exactly 20 years. The discount
,/ , / ,/ , / , / , / , / ,/ ,/ , / ,/ , / ,/ , / ,/
rate is 6%. What is the present value, today?
,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/ ,/
