WGU C214 OA Financial Management Pre-Test Exam Questions and Answers (Verified Answers)

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WGU C214 OA Financial Management Pre-Test Exam Questions and Answers (Verified Answers) 1 / 57 1. What is included in the Income Statement and NOT in the Statement of Cash Flows?: Depreciation Exp... ense 2. Computation of Net Income: A co. sold products in 2014 for $120k and collected $100k cash and remainder in 2015. Co. incurred $70k expenses for 2014 and paid $100k which included $30k for expenses incurred in 2013. What is net income for 2014?- : Computation of Net Income (R-E=NI) $50,000 Net Income = $120k - $70k = $50k, or Revenues - Expenses Incurred = Net Income 3. Retained Earning Statement: The beginning retrained earnings on 1/14/14 is $25k. The NI for 2014 is $50k and the dividend payout ratio is 25% of NI. What are retained earnings on 12/31/14?: Retained Earning Statement: $62,500 Retained earnings on12/31/14 = $25k + $50k - (.25x$50k) = $62,500 4. Retained Earnings: Firm reported RE of $300 in 12/31/12. For 12/31/13 firm reports RE of $400 and pays dividends of $25. What is NI in 2013?: Retained Earnings: Answer $125 Logic is $300 from $400 is $100 plus the $25 dividend totals out to $125. 300 + NI - 25 = 400: NI=125, so 300+125-25=400 5. Balance Sheet: Basic equation for the Balance Sheet is?: Balance Sheet: Equity = Assets - Liabilities, or it can also be seen as Assets = Liabilities + Equity 6. Investment: Simple Interest: An investment of $10k made today at 8% simple interest for 3 yrs and 9 mo. will yield in principle and interest of?: Interest: Simple Interest $13,000 Principal + Interest = $10,000 + (10k x .08x3.75) = $13k 7. Investment returns: A stock will be worth $36 at EOY and will pay dividend of $2.25. How much should an investor pay for the stock if investor expects a 12% rate of return?: Investment returns:WGU C214 OA Financial Management Pre-Test Exam Questions and Answers (Verified Answers) 2 / 57 Highest price for stock = X+0.12= $36+$2.25/1.12 (add "1" to 12% as "X" variable) = $38.25/$1.12 = $34.15 8. Investment: Rate of Return You want to purchase Ord common stock at $55/share, hold 1 year, and sell after $3 dividend is paid. What would stock price be to satisfy your required ROR of 15%?: Investment: Rate of Return $60.25 Price=$55 + (.15x$55) -3 = $60.25 9. Investment: Stocks Two types of expected returns when investing in stocks?: Investment: Stocks 1. Dividends 2. Appreciation of the price of stock = Total return in the investment of stock 10. Investment: Stock A broker purchased stock that pays $1.15 annual dividend for %16 w/a required ROR of 15%. What is the actual return if sold at EOY 1 for $19?: - Investment: Stock ROR=(($1.15+$19)-16) /16 = .259 or 25.9% ((Dividend+EOY stock price)-begin stock price) / by begin stock price = actual return %. [Show More]

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