(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .(WGU D076) BUS 2040 Finance Skills for Managers - Complete OA Review .
,1. Multiple Choice: Which financial statement reports a company's
financial performance over a specific accounting period?
A) Balance Sheet
B) Income Statement
C) Cash Flow Statement
D) Statement of Shareholders' Equity
Correct Answer: B) Income Statement
Rationale: The income statement provides an overview of
revenues, expenses, net income, and earnings per share over a
specific period, reflecting a company's financial performance.
2. Fill-in-the-Blank: The __________ is a financial metric that
measures a company's ability to repay its short-term liabilities with
its short-term assets.
Correct Answer: Current Ratio
Rationale: The current ratio is an indicator of liquidity, calculated
as current assets divided by current liabilities.
3. True/False: The cost of goods sold is deducted from net sales to
calculate gross profit.
Correct Answer: True
, Rationale: Gross profit is calculated by subtracting the cost of
goods sold from net sales, reflecting the profitability of a company's
core business activities.
4. Multiple Response: Select all that apply. Which of the following
are considered non-operating income?
A) Dividend income
B) Interest expense
C) Rental income
D) Sales revenue
Correct Answers: A) Dividend income, C) Rental income
Rationale: Non-operating income includes revenues and
expenses not related to the primary business activities, such as
dividend and rental income. Sales revenue is operating income,
while interest expense is a non-operating expense.
, Rationale: The payback period method calculates the time taken
to recover the initial investment, ignoring the time value of money,
unlike NPV and IRR which consider it.
6. Fill-in-the-Blank: The __________ is used to evaluate the
profitability and efficiency of a company's investment in assets.
Correct Answer: Return on Assets (ROA)
Rationale: ROA measures how effectively a company uses its
assets to generate earnings, calculated as net income divided by
total assets.
7. True/False: Financial leverage benefits shareholders only when
the return on investment exceeds the cost of debt.
Correct Answer: True
Rationale: Financial leverage amplifies the potential returns to
shareholders; however, it is beneficial only if the company earns
more on its investments than it pays in interest.
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ClemAcademia. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
