question with accurate answers, 100

WGU C708 Finance v4 Pre-Assessment question with accurate answers, 100% Accurate. Rated A+

Which activity is financial management responsible for? - ✔✔-Ensuring sufficient financing is available

What is one of the main areas of the financial environment? - ✔✔-Investments

What is a common challenge in the world of finance? - ✔✔-It generally operates with a high degree of uncertainty

Which variable must be considered when a corporation's finance department is determining the best strategy for financing a project? - ✔✔-The amount of debt and equity financing currently in use

An individual is interested in establishing a lawn care business as a sole proprietorship. What will be a disadvantage of choosing this business model? - ✔✔-Unlimited liability

What is one benefit of a sole proprietorship? - ✔✔-The owner has uninterrupted control of the business.

What is a disadvantage of a general partnership? - ✔✔-Owners' personal assets are not protected against claims of creditors.

What is one advantage of an LLC? - ✔✔-Limited personal liability

What is an example of a potential principal-agent problem? - ✔✔-Corporate executives buying other companies to expand their influence

An individual decides to sell corporate bonds to another investor. Which type of financial market or institution would be involved in this transaction? - ✔✔-Retail securities firm

A firm wants to sell new shares of stock. Which other institution is involved in this type of transaction? - ✔✔-Investment banking firm

A partnership needs funds to purchase technology equipment. It will be able to repay those funds in under a year's time. Which organization should the partnership contact to obtain the needed funds? - ✔✔-Retail bank

Which type of transactions do financial institutions deal with? - ✔✔-Deposits

What is considered a financial institution? - ✔✔-Commercial bank

Which situation is unethical? - ✔✔-The investment manager publishes false investment performance reports in hopes of convincing new investors to invest money

Which type of financial statement is used to determine the short-term viability of a company? - ✔✔- Statement of cash flows

Which are components of an income statement? - ✔✔-Revenue and expenses

Which statement describes the historical cost principle? - ✔✔-Most assets are valued at their original cost when acquired by a company

When do business owners and managers use financial statements? - ✔✔-When deciding to make or purchase certain materials

Which financial method allows external users to determine the net worth of a business? - ✔✔-Analyzing financial statements

Which financial method will be useful in summarizing an individual firm's operating, investing, and financing activities? - ✔✔-Analyzing financial statements

Which item from a company's financial statement is considered a non-cash item? - ✔✔-Intangibles

Which documents would have the necessary information needed to calculate profitability ratios? - ✔✔- Financial statements

A company has sales of $132 million, net income of $24 million, a total asset turnover of 0.84, and a leverage multiplier of 1.6. What is this company's return on equity, using the DuPont formula? Round to two decimal places - ✔✔-24.43%

A company has sales of $56 million, net income of $19 million, a total asset turnover of 0.98, and a leverage multiplier of 1.2. What is this company's return on equity, using the DuPont formula? Round to two decimal places - ✔✔-39.90%

A company has a return on equity of 15%, a leverage multiplier of 1.5, and a total asset turnover of 0.93.What is this company's net margin, using the DuPont formula? - ✔✔-10.75%

What does a spontaneous account refer to? - ✔✔-An account on the balance sheet and income statement that tends to vary when sales are changed

A firm has a net income of $68.0 million and pays out $9.1 million in dividends. The firm has total assets of $987 million and total liabilities of $559 million. What is the firm's sustainable growth rate, given this information? Round your answer to two decimal places. - ✔✔-13.76%

Which type of data is collected by observing many subjects at the same point in time? - ✔✔-Cross- sectional

What does retained earnings on the balance sheet represent? - ✔✔-The total of firm earnings that have been reinvested in the firm

Which account is a spontaneous account? - ✔✔-Inventory

A firm has projected assets to be $22 million, liabilities to be $11 million, and owner's equity to be $3 million. What is the discretionary financing need? - ✔✔-$8 million

How is discretionary financing calculated? - ✔✔-Net change in assets minus the sum of the net change in liabilities and retained earnings.

Which term describes the gain or loss on an investment over a period of time? - ✔✔-Rate of return

A company invested $400,000 in real estate and later sold the real estate for $500,000. What was the rate of return on this investment? - ✔✔-25%

Which type of loan interest is calculated on both the principal of the loan and any accumulated interest called? - ✔✔-Compound interest

Which concept describes an investor preference for less risky short-term bonds over riskier long-term bonds? - ✔✔-Liquidity premium theory

Which term describes a graphic representation that uses a line to depict the relationship between the cost of borrowing (interest rates) and the term of a debt contract? - ✔✔-Yield curve

In the 1920's, a country experienced a monthly inflation of 30,000%. Which type of inflation occurred? - ✔✔-Hyperinflation

Which scenario represents an opportunity cost? - ✔✔-Mary keeps money in her purse instead of partnering in her friend's popular lemonade stand

What is time value of money (TVM)? - ✔✔-Money today is worth more than the same amount in the future.