WGU D076 Finance Skills for Managers

What is a reasonable alternative to keeping an emergency stash of cash? - Answer- Investing in a savings account Investing in a readily withdrawable account that still earns some interest is a value-preserving alternative. Which area of finance deals with sources of funding and the capital structure of corporations and seeks to increase the value of a firm to its owners? - Answer- Business finance is the area of finance that deals with uses and sources of funding to increase the value of the firm. What is the primary difference between finance and accounting? - Answer- Finance focuses on the future, while accounting is generally backward-looking. Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn positive returns? - Answer- Investments is the area of finance that seeks to create wealth in the future by deciding where to allocate money. What is the primary goal of the financial manager of a firm? - Answer- To maximize owner wealth. The financial manager should make decisions based on the primary goal of maximizing owner wealth. What should be the main question a firm asks when considering any investment decision? - Answer- Do the benefits of this investment outweigh the costs? For any investment, you should expect to receive a benefit worth at least as much as the initial cost. What is the primary aim of personal finance goals? - Answer- To maximize satisfaction from products purchased and services obtained. The objective of personal financial goals is to maximize one's utility. Which task does a financial manager perform when choosing to obtain a loan to purchase a piece of equipment for a new project? - Answer- Making financing decisions. The manager is deciding where to get the funds to support a new project, which means the manager is making a financing decision. Which financial career focuses on investing capital into firms whose shares are not currently sold on any public stock exchange? - Answer- Private equity deals with investments in firms that are privately held and whose ownership is not yet bought or sold on any public stock exchange.