WGU - C214 Financial Management Final Exam 2024

Statement of Cash Flows - Shows the change in cash balance for a period of time. Focuses only on items where cash is received, or cash is paid. Cash Flow from Operating Activities (CFO) - Cash flow that a company generates as a result of day-to-day business operations. Deals with Current Assets and Current Liabilities. Cash Flow from Investing Activities (CFI) - Cash flow that is generated from investments in long term assets. Cash Flow from Financing Activities (CFF) - Cash flow that is used to fund the company. Cash flow that is generated from financing the business. Includes Debt & Equity. How does an increase in Accounts receivable impact CFO? - An Increase in Accounts receivable will decrease CFO How does an increase in Accounts payable impact CFO? - An Increase in Accounts Payable will increase CFO What financial statement is prepared at a point in time - Balance Sheet What financial statements are prepared for a period of time? - · Income Statement · Retained Earnings Statement · Statement of Cash Flows Define Efficient Frontier - Maximizes expected return for a given level of risk Where would a risk averse investor fall on the efficient frontier? - 100% Bonds Where would a risk-taking investor fall on the efficient frontier? - 100% Stocks What is a Beta? - A Measure of Risk - A Beta 1 is the average risk of all stocks. Anytime a beta is below 1, it is less risk. If it is more than 1, it is high risk. Define efficient market hypothesis as it relates to a firm? - For any company to survive, they need to make profitable decisions. Otherwise, investors will shun their business. The firm needs to invest where the return is more than the cost.