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D775 / D 775 Objective Assessment ( Update 2025 / 2026) Introduction to Business Finance Questions & Answers - WGU
Question:
____ financing provides tax breaks because interest payments are made before companies pay tax liabilities.
Answer:
Debt
Question:
Capital Budgeting
Answer:
The process of evaluating and selecting major investments or expenditures.
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Question:
What is the name for the process of evaluating for new machinery, expansion or new product lines?
Answer:
Capital budgeting
Question:
Profitability Index (PI)
Answer:
Ratio of the discounted cash flows to the cost of the project If PI = 1, the projects discounted cash flows equal the initial cost
Question:
High levels of spontaneous assets (inventory, AR) and low levels of spontaneous liabilities (AP), will ____ DFN.
Answer:
Increase
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Question:
What type of bonds are considered junk bonds?
Answer:
Speculative
Question:
What do profitability ratios indicate?
Answer:
Earnings relative to income.
Question:
What is the primary difference between fixed asset turnover and return on assets?
Answer:
Fixed asset turnover is an activity ratio; return on assets is a profitability ratio.
Question:
What metric should managers use to determine if they can afford bonuses?
Answer:
Quick ratio 3 / 4
Question:
What financial metric should be used with the payback period to provide a more comprehensive investment evaluation?
Answer:
Net present value
Question:
How is the cost of capital typically measured?
Answer:
As a percentage return.
Question:
Stocks
Answer:
certificates that represent fractional ownership of a firm; Two types common and preferred
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