Free WGU Financial-Management Exam Questions

Question 1

Considering the fundamental relationships of the balance sheet, how can a company’s assets increase without a corresponding rise in liabilities?

A : The company could increase the amount of cash it pays out as dividends.

B : The company could increase the amount of depreciation it recognizes.

C : The company could finance the assets by restructuring its long-term debt.

D : The company could finance the assets by increasing owners’ equity.

Answer: D

Question 2

Considering the fundamental relationships of the balance sheet, how can a company’s assets increase without a corresponding rise in liabilities?

A : The company could increase the amount of cash it pays out as dividends.

B : The company could increase the amount of depreciation it recognizes.

C : The company could finance the assets by restructuring its long-term debt.

D : The company could finance the assets by increasing owners’ equity.

Answer: D

Question 3

What is the relationship between the length of the cash cycle and the amount of cash a firm needs to operate?

A : A longer cash cycle reduces the need for operational cash due to increased efficiency.

B : The cash cycle length has no impact on operational cash needs.

C : Shorter cash cycles require more cash to handle rapid transactions.

D : Companies must keep more cash on hand if they maintain a longer cash cycle.

Answer: D

Question 4

A company is expected to pay a dividend of $2 next year, and dividends are expected to grow at 5% per year indefinitely. The required rate of return on the company’s stock is 10%. What is the value of the stock using the Gordon growth model?

A : $15

B : $20

C : $40

D : $61

Answer: C

Question 5

A company is expected to pay a dividend of $2 next year, and dividends are expected to grow at 5% per year indefinitely. The required rate of return on the company’s stock is 10%. What is the value of the stock using the Gordon growth model?

A : $15

B : $20

C : $40

D : $61

Answer: C