WGU d366 study questions section 1 || A Verified A+ Pass.
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Course
WGU d366
Institution
WGU D366
A firm is using estimates of what its share value is in order to make decisions about whether to buy, sell, or hold onto its equity securities.
Which state of financial statement analysis is the firm involved in? correct answers Step 6: Value the firm
During this step, the value of the firm is ...
WGU d366 study questions section 1 || A Verified A+ Pass.
A firm is using estimates of what its share value is in order to make decisions about whether to
buy, sell, or hold onto its equity securities.
Which state of financial statement analysis is the firm involved in? correct answers Step 6: Value
the firm
During this step, the value of the firm is determined, often along with its intrinsic value. This
includes the intrinsic value and the selling prices for existing assets of the firm at a given time.
As part of its financial statement analysis, a company is estimating what its likely future
profitability, growth, and risk will be, and, in turn, the likely future returns from investing in the
company.
Which step of financial statement analysis is the firm involved in? correct answers Step 5:
Preparing forecasted financial statements
As part of its financial statement analysis, a company is evaluating the business model the firm is
executing to be different and successful in its industry.
Which step of financial statement analysis is the firm involved in? correct answers Step 2:
Identifying the strategies the firm will use to gain and keep a competitive advantage
Step 2 involves asking questions about the business model, current competitive advantages,
sustainability of that advantage, and if products are meeting needs.
As part of its financial statement analysis, a company is reviewing whether its profit margin is
increasing or decreasing over time.
Which step of financial statement analysis is the firm involved in? correct answers Step 4: Using
financial statements to analyze current profitability, growth, and risk
Step 4 asks about the rate of return from assets, rate of return for common equity shareholders,
and whether profit margin is increasing or decreasing over time.
A potential investor is identifying whether or not the company belongs to an industry that
includes a large number of firms selling the same product or only a small number of firms selling
unique products.
Which step of financial statement analysis is the potential investor involved in? correct answers
Step 1: Identifying the economic characteristics and competitive dynamics of the industry in
which the firm participates.
Step 1 involves asking about dynamic forces driving competition and how technological change
impacts competitive advantage.
As part of its financial statement analysis, an auditor is trying to determine whether its client has
selected a specific certain accounting method simply to make the firm appear more profitable or
less risky than economic conditions otherwise suggest.
Which step of financial statement analysis is the auditor involved in? correct answers Step 3:
Obtaining and evaluating the quality of the information available from a firm's financial
statements
, Step 3 involves asking questions about nonrecurring gains or losses in earnings, if the firm is
claiming certain assets or liabilities, or if the firm is using certain accounting methods to make
the firm appear more profitable.
Which of Porter's Five Forces depicts vertical competition in the value chain? Choose two
answers. correct answers Buyer power
Supplier power
Which of Porter's Five Forces depict horizontal competition in the value chain? Choose two
answers. correct answers Rivalry among existing firms
Potential entry
"Rivalry among existing firms" is correct. According to Porter's Five Forces framework, rivalry
among existing firms represents horizontal competition among current or potential future firms
in the industry and closely related products and services.
"Potential entry" is correct. According to Porter's Five Forces framework, potential entry
represents horizontal competition among current or potential future firms in the industry and
closely related products and services.
What is Porter's Five Forces framework used to analyze? correct answers Industry competition
Porter's Five Forces framework is used to analyze the forces of competition within an industry.
A local high school houses a large food court-style cafeteria, which provides students with
multiple lunch options.
Which of Porter's Five Forces would a student's choice of lunch options be a strong example of?
correct answers Threat of substitutions
Because students have multiple lunch options, they can easily switch from one option to another
(i.e., substitute one for another.)
What is likely to happen if many new businesses enter a market? correct answers Competitive
rivalry will intensify.
In general, the lower the industry concentration, the higher the competition between existing
rivals.
A firm is trying to determine if its customers are highly price-sensitive or relatively insensitive.
Which of the economic framework attributes would apply to this analysis? correct answers
Demand
The demand attribute involves asking questions such as:
Are customers highly price-sensitive, as in the case of automobiles, or are they relatively
insensitive, as in the case of soft drinks?
Is demand growing rapidly, or is the industry relatively mature?
A chain retail store's products are also offered at many other retail stores but at higher prices.
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