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WGU D076 EXAM QUESTIONS AND ANSWERS 2024
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WGU D076 EXAM QUESTIONS AND ANSWERS 2024
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WGU D076 EXAMYou are a financial manager of a company, and you have projected sales increase
for next year of 8%. Which action would you take when you conduct financial
forecasting using the percent of sales method? - ANSWERS-Leave the notes
payable account constant in the projected financial statements.-Notes payable is
a discretionary account. Thus, you should leave it constant in the projected
financial statements.
You are conducting financial forecasting for your firm given the projected sales.
What are you doing if you are estimating changes in the balance sheet based on
the predicted change in sales? - ANSWERS-Forecasting spontaneous accounts
-Spontaneous accounts change in proportion to sales growth.
What is the sustainable growth rate (SGR)? - ANSWERS-The growth rate that
allows a firm to maintain its present financial ratios without issuing new equity
- The SGR is the growth rate that allows a firm to maintain its present financial
ratios without issuing new equity.
How can a company reduce its discretionary financing needed (DFN)? - ANSWERS-
Increase the net margin. - Increasing net margin increases the projected owners'
equity, thus reducing the DFN.
Which action increases a company's sustainable growth rate (SGR)? - ANSWERS-
Decreasing dividend payout - Decreasing dividend payout increases earnings
retention and thus increases the SGR.
,Which account should be looked at first when examining capacity constraints to
determine whether the discretionary financing needed (DFN) can be reduced? -
ANSWERS-Fixed assets - You can recheck capacity analyses to verify whether the
firm really needs as large of an increase in fixed assets as projected in the
forecast.
How can a firm grow its fixed assets if it is expecting growth but has reached
capacity with its fixed assets? - ANSWERS-Invest a substantial amount of money
at one time to increase capacity. - Investments in fixed assets are capital-
intensive, meaning they require large payments at one point in time.
What does the sales capacity equation tell you? - ANSWERS-How much room a
firm has to grow without additional investment in fixed assets- By using the ratio
of actual sales to percent of capacity, you can determine how much sales growth
the firm can support without needing to invest in further fixed assets.
What is discretionary financing needed (DFN)? - ANSWERS-The additional
financing needed given a firm's expected future growth - DFN is how much
additional financing the firm will need given its expectations for future growth.
You are a financial manager of a company. The marketing department has
informed you that the projected sales growth for the upcoming year is 10%. As
you conduct financial forecasting, you keep the long-term liabilities the same
amount as the previous year and will discuss this account with the other
managers later. What type of account is long-term liabilities? - ANSWERS-
Discretionary account
,- Discretionary accounts do not vary automatically with sales but are left to the
discretion of management. In this scenario, you kept the long-term liabilities
account the same.
What does the discretionary financing needed (DFN) tell us? - ANSWERS-The total
amount of funding that management will need to obtain through discretionary
financing sources
- DFN is the difference between the projected total assets and the projected total
liabilities plus owners' equity. Any discrepancy between the sources and uses of
finance is extra financing that management must obtain.
Company ABC would like to continue to grow, but in order to maintain control of
all decisions and ownership, it wants to avoid issuing new stock. Which calculation
will show the company's leadership the fastest that ABC can grow? - ANSWERS-
Sustainable growth rate - Sustainable growth rate is defined as the rate at which a
firm can grow without issuing new equity. It implies that the firm's growth comes
from the return on equity less any dividends.
What is the major purpose of financial forecasting? - ANSWERS-To inform a
company how business decisions will impact future growth - Financial forecasting
helps decision makers understand how actions taken today can impact the firm's
future performance.
What is the name for a forecast of short-term events that helps a company
understand if it has sufficient cash? - ANSWERS-Cash budget - A cash budget is a
short-term forecast of future events that helps a company understand whether it
has sufficient cash for regular operations.
, What is the purpose of a monthly cash budget? - ANSWERS-To control cash
inflows and outflows so you can balance income with expenditures and savings
- Controlling cash inflows and outflows allows you to use your money in the most
effective way possible.
In which situation would a firm need to borrow cash? - ANSWERS-When the
beginning cash balance plus the net cash is less than the minimum cash balance
required for the month - This indicates to a firm that additional financing will be
needed during the period to operate effectively.
How can you use the envelope method of budgeting to monitor cash flows? -
ANSWERS-Put the amount of money budgeted for each category of your expenses
into labeled envelopes and then spend the money in each envelope on expenses
in that category. - This method will help you plan and monitor your cash flows.
How should you go about making changes to your budget? - ANSWERS-Prioritize
the changes you want to make and then implement them gradually one by one to
make sure they work. - Revising your budget in this way will help changes go
smoothly and help your company or family members become familiar with the
changes.
You are a financial manager of a company. The marketing department has
informed you that the projected sales growth for the upcoming year is 15%. As
you conduct financial forecasting, you increase cash, accounts receivable, and
inventory accounts by 15%—the same as the projected sales growth. What type
of accounts are these? - ANSWERS-Spontaneous accounts - Spontaneous accounts
vary naturally with sales. Since they increase proportionally with sales growth,
they are examples of spontaneous accounts.
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