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WGU D076 Finance Skills for Managers Q&A RATED A+
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Accounting The system of recording, reporting, and summarizing past financial information and transactions. Accounts Receivable Turnover (AR Turnover) An activity ratio found by credit sales divided by accounts receivable. Activity Ratios A category of ratios that measure how well a company us...

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  • February 3, 2024
  • 37
  • 2023/2024
  • Exam (elaborations)
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  • wgu d076 finance skills for managers qa rated a

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  • A/AS Level
  • AQA
  • WGU
  • WGU D076
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WGU D076 Finance Skills for Managers
Q&A RATED A+
Accounting

The system of recording, reporting, and summarizing past financial information and transactions.

Accounts Receivable Turnover (AR Turnover)

An activity ratio found by credit sales divided by accounts receivable.

Activity Ratios

A category of ratios that measure how well a company uses its assets to generate sales or cash, showing
the firm's operational efficiency and profitability.

Additional Funds Needed (AFN)

Another name for the discretionary financing needed or external financing needed. It represents the
additional financing needed given a firm's expectations for future growth.

Affirmative Covenants

A bond covenant that describes things the company pledges itself to do in order to protect bondholders.

Agency Costs

Costs that are incurred when management does not act in the best interest of shareholders.

Agency Problem

When the agent (the management) does not act in the best interest of the principle (the owners).

Aggressive Assets

Companies or securities with beta greater than 1.

Annual Percentage Rate

The annual interest rate that is charged for borrowing money or that is earned through investment.

Annuity Due

A series of equal payments made at the beginning of consecutive periods.

Annuity

A stream of cash flows of an equal amount paid every consecutive period.

,Asset Pricing

The process of valuing assets.

Auction Market

A secondary market with a physical location and where prices are determined by investors' willingness
to pay.

Average Collection Period (ACP)

An activity ratio found by the number of days in a year (365) divided by AR turnover.

Balance Sheet Forecasting

Using sales growth and the profit forecast to construct a pro forma balance sheet to understand the
future implications of the sources and uses of finances.

Banks and Credit Unions

Receive deposits and extend loans to individuals and businesses.

Benchmarking

The process of completing a financial analysis to compare a firm's financial performance to that of other
similar firms.

Beta

A variable that describes how the price of a security varies with the market.

Bid-ask Spread

The difference between the bid and ask prices that compensate the specialist for the risk that he or she
bears for willingness to provide liquidity.

Board of Directors

A group of people who jointly supervise the activities of an organization.

Bond Indenture

A legal contract that governs the relationship between a firm and its bondholders.

Bondholders

A person who loans a corporation money by buying debt securities.

Business Finance

,An area of finance that deals with sources of funding, the capital structure of corporations, the actions
that managers take to increase the value of the firm to its owners, and the tools and analysis used to
allocate financial resources.

Cannibalization

The reduction in sales of a company's own products due to introduction of another similar product.

Capital Asset Pricing Model (CAPM)

A model used to determine the risk-return relationship for an asset.

Capital Budgeting Criteria

Metrics and calculations used to determine whether a project or asset will add value and be a
worthwhile investment.

Capital Budgeting

The process of evaluation and planning for purchases of long-term assets.

Capital Investment

The sum of money invested in a business to purchase long-term assets to further its objective of
maximizing owner wealth.

Capital Markets

A type of financial market used for long-term assets that are held for greater than one year.

Capital Structure

The mixture of debt and equity used to finance a firm.

Capital

A financial asset that can be used by a firm or individual. Examples of capital may be machinery or cash
held by a firm.

Capital-constrained Environment

When a limited amount of funds are available.

Cash Budgets

A plan for controlling cash inflows and outflows business to balance income with expenditures.

Cash Management

, Managing the day-to-day finance operations of a firm.

Central Banks

Ensure that a nation's economy remains healthy by controlling the amount of money circulating in the
economy.

Common Stock

A type of stock that represents equity in a firm and confers the right to vote at shareholder meetings.

Compounding Interest

The interest on the principal plus the interest on earned interest.

Compounding

Finding a future value given a present value.

Corporate Bonds

A debt instrument that is issued by a corporation in order to raise capital.

Corporate Governance

The system of rules, practices, and processes by which a firm is directed and controlled.

Correlation

The measure of the relationship between two variables that move in relation to each other.

Cost of Capital

The cost to a firm to use an investor's capital; see interest rate.

Coupon Rate

The stated interest rate of a bond; also known as coupon yield.

Coupon Yield

The stated interest rate of a bond; also known as coupon rate.

Covenants

Statements in a bond indenture that outline things the company will obligate itself to do or not do in
order to protect bondholders.

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