WGU C214 Financial Management Final Exam Study Guide
Statement of Cash Flows
Cash Flow from Operating Activities (CFO)
Cash Flow from Investing Activities (CFI)
Cash Flow from Financing Activities (CFF)
How does an increase in Accounts receivable impact CFO?
How does an increase in Accounts payable impact CFO?
What financial statement is prepared at a point in time
What financial statements are prepared for a period of time?
Define Efficient Frontier
Where would a risk averse investor fall on the efficient frontier?
Where would a risk-taking investor fall on the efficient frontier?
What is a Beta?
Define efficient market hypothesis as it relates to a firm?
What is the intrinsic value of a stock under efficient market hypothesis?
Whenever the question states that dividend was paid recently or
was just paid, what must be calculated first?
For every Bond question, what must be entered?
What is Capital Budgeting?
What information is needed for capital budgeting?
Define NPV?
Define IRR?
Define Free Cash Flow
Shows the change in cash balance for a period of time. Focuses
only on items where cash is received, or cash is paid.
Cash flow that a company generates as a result of day-to-day
business operations. Deals with Current Assets and Current Liabilities.
Cash flow that is generated from investments in long term assets.
Cash flow that is used to fund the company. Cash flow that is
generated from financing the business. Includes Debt & Equity.
An Increase in Accounts receivable will decrease CFO
An Increase in Accounts Payable will increase CFO
Balance Sheet
· Income Statement
· Retained Earnings Statement
· Statement of Cash Flows
Maximizes expected return for a given level of risk
100% Bonds
100% Stocks
A Measure of Risk - A Beta 1 is the average risk of all stocks.
Anytime a beta is below 1, it is less risk. If it is more than 1, it is
high risk.
For any company to survive, they need to make profitable decisions. Otherwise, investors will shun their business. The firm
needs to invest where the return is more than the cost.
The intrinsic value of stock is the present value of the stock's after
tax net cash flows.
Expected Dividend
FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
Refers to long term investment decision making.
Refers to the process used in making investment decisions involving projects that generate cash flows over a multi-year horizon.
Initial Outlay
(How much money the company is going to invest in the company
right now)
Differential Annual Cash Flows
(Cash flow that the project will generate year after year)
Terminal Cash Flow
(Cash flow generated at the end of the project)