WGU D076 Final Exam (New 2024/ 2025
Update) Finance Skills for Managers|
Questions and Verified Answers| 100%
Correct| A Grade
QUESTION
What two types of "Turnover" are useful for understanding a firm's effi- ciency in creating sales
with its assets?
Answer:
Total Asset turnover...
WGU D076 Final Exam (New 2024/ 2025 Update) Finance Skills for Managers | Questions and Verified Answers| 100% Correct | A Grade QUESTION What two types of "Turnover" are useful for understanding a firm's effi - ciency in creating sales with its assets? Answer: Total Asset turnover and Fixed asset turnover QUESTION Why is operating margin frequently used to compare firms of different structures? Answer: Because it is calculated pre interest. QUESTION What type of ratio is used to consider how a firm is financed and to assess a firm's ability to pay interest and pay back long -term obligations? Answer: Financing ratios QUESTION What type of ratio considers how a firm is financed? Answer: Financing ratio QUESTION Market -to-book ratio Answer: market price per share/book value per share QUESTION When using the time value of money in excel, what "type" is an ordinary annuity? Answer: Type: 0 because its at the end of the period QUESTION What is an NPV of 0? Answer: Breakeven QUESTION What does it mean when the NPV is less than 0? < 0 Answer: That you may generate loss QUESTION What does it mean when the NPV is greater than zero? 0 > Answer: That it will add value to the firm QUESTION Why might a firm prefer to raise debt capital through bonds instead of stocks? Answer: Bonds do not require a firm to give up any ownership. QUESTION Why is it appropriate to calculate the value of a bond in the same way that the present value of an annuity is calculated? Answer: Bonds pay a coupon every six months, pay a constant coupon amount, and have a maturity date. QUESTION Why is it important to consider the cost of capital in an ideal evaluation method of capital investment? Answer: Because cash flows for a project may be uncertain QUESTION What must be determined in order to compare the values of two projects with differently timed cash flows that does not need to be determined for projects with similarly timed cash flows? Answer: Opportunity cost QUESTION You are considering a project that has a profitability index of 1.What does this mean? Answer: The project has the internal rate of return equal to the cost of capital. QUESTION Why is it appropriate to calculate the value of a preferred stock in the same way that you would find the present value of a perpetuity? Answer: For a preferred stock, a fixed amount is paid forever to compensate the investors. QUESTION What would an analyst predict for a potential investment with an NPV of zero? Answer: The project would earn exactly the rate of return required by the firm. QUESTION What are the responsibilities of the SEC? Answer: to protect investors, maintain fair, orderly, and efficient markets; and facilitate capital information. QUESTION Which financial institution includes entities that receive money from in - stitutional investors and wealthy individuals to buy troubled companies to improve them and earn returns by selling them or going public? Answer: Private equity QUESTION About a year ago, the short -term Treasury bill had 1.54% interest and the long -term Treasury note had 2.54% interest. This week, the 1 -year Treasury bill has an interest rate of 3.13%, while the 10 -year Treasury note has an interest rate of 2.28%. What doe s this information indicate about the future economy?
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