This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 11 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following statements is correct for an aggressive financing policy for a firm relative to a former conservative policy? A) The firm will see an increase in its expected profits. B) The firm will use long-term financing to finance all fixed and current assets. C) The firm will see a decline in its risk profile. D) The firm will need to issue additional common stock this period to finance the assets. Show Answer Correct Answer: A) The firm will see an increase in its expected profits. 2. The tool of treasury management do not include A) Foreign exchange management. B) Cash management. C) Receivable management. D) Risk management. Show Answer Correct Answer: D) Risk management. 3. Which among the following is a type of inventory system that is used to manage independent demand items A) Order point level. B) Material requirements planning. C) Time phased order point. D) Firms resource planning. Show Answer Correct Answer: C) Time phased order point. 4. Which of the following is not a current assets A) Accounts Receivable. B) Inventory. C) Creditors. D) Marketable Securities. Show Answer Correct Answer: C) Creditors. 5. Common share can be classified as ..... A) Permanent asset. B) Temporary asset. C) Permanent source. D) Temporary source. E) Spontaneous source. Show Answer Correct Answer: C) Permanent source. 6. What is the primary objective of an aggressive working capital policy? A) Maximizing profitability at the expense of liquidity. B) Minimizing the risk of default on short-term obligations. C) Holding higher levels of cash for future investments. D) Ensuring timely payment of long-term debts. Show Answer Correct Answer: A) Maximizing profitability at the expense of liquidity. 7. Which of the following is true of an aggressive funding strategy of a firm? A) Under an aggressive funding strategy, a firm funds it seasonal requirements with bonds and long termloans. B) Under an aggressive funding strategy, a firm funds its seasonal requirements with short-term debt. C) Under an aggressive funding strategy, a firm funds both its seasonal and its permanent requirementswith long-term debt. D) Under an aggressive funding strategy, a firm funds it permanent requirements with commercial paperand notes payable. Show Answer Correct Answer: B) Under an aggressive funding strategy, a firm funds its seasonal requirements with short-term debt. 8. The best suited deposit for trading community is A) Saving deposit. B) Fixed deposit. C) Current deposit. D) Recurring deposit. Show Answer Correct Answer: C) Current deposit. 9. Primary Working Capital is..... A) The minimum working capital that a company must have to maintain or continue its life. B) Working capital required by a company to support the company's normal operations. C) Working capital caused by seasonal fluctuations. D) The amount of working capital changes as a result of conjunctural fluctuations. E) Working capital that changes due to unexpected events. Show Answer Correct Answer: A) The minimum working capital that a company must have to maintain or continue its life. 10. A financial manager who wants her investment to have a higher return would choose to invest some of her firm's excess cash in commercial paper over Treasury bonds A) True. B) False. Show Answer Correct Answer: A) True. 11. Which financing method is commonly associated with an aggressive working capital policy? A) Short-term debt. B) Long-term debt. C) Equity financing. D) Retained earnings. Show Answer Correct Answer: A) Short-term debt. 12. If the average balance of debtors has increased, which of the following might not show a change in general A) Total sales. B) Average payables. C) Current ratio. D) Bad debts. Show Answer Correct Answer: B) Average payables. 13. If average balance of debtors has increased, which of the following might not show a chance in general? A) Total sales. B) Average payables. C) Current ratio. D) Bad debts. Show Answer Correct Answer: B) Average payables. 14. Which of the following is the danger of too high amount of working capital A) It results in unnecessary accumulation of inventory and gives chance to inventory mishandling, wastage. B) Excess working capital means idle funds which earns no profits for the business. C) It results in overall inefficiency. D) All of above. Show Answer Correct Answer: D) All of above. 15. Commercial paper is a type of A) Fixed coupon bonds. B) Unsecured short term book Dept. C) Equity share capital. D) Government bonds. Show Answer Correct Answer: B) Unsecured short term book Dept. 16. Commercial paper are generally issued at a price A) Equal to face value. B) More than face value. C) Less than face value. D) Equal to redemption value. Show Answer Correct Answer: C) Less than face value. 17. Permanent working capital A) Varies with seasonal needs. B) Includes fixed assets. C) Is the amount of current assets required to meet a firm's long-term minimum needs. D) Includes accounts payable. Show Answer Correct Answer: C) Is the amount of current assets required to meet a firm's long-term minimum needs. 18. Another term for "stock" (in the context working capital) A) Shares of a company. B) Inventory of finished or unfinished goods or unused raw materials. C) Price sold on the stock market. D) None of above. Show Answer Correct Answer: B) Inventory of finished or unfinished goods or unused raw materials. 19. Increasing the credit periods from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in A) An increase in the average collection period. B) A decrease in bad debt losses. C) An increase in sales. D) High profits. Show Answer Correct Answer: A) An increase in the average collection period. 20. Commercial bills will always A) Trade at a premium prior to maturity. B) Trade at a discount prior to maturity. C) Pay coupons. D) Pay interest on a compounding basis. Show Answer Correct Answer: B) Trade at a discount prior to maturity. ← PreviousNext →Related QuizzesWorking Capital Management Quiz 1Working Capital Management Quiz 2Working Capital Management Quiz 3Working Capital Management Quiz 4Working Capital Management Quiz 5Working Capital Management Quiz 6Working Capital Management Quiz 7Working Capital Management Quiz 8Working Capital Management Quiz 9Working Capital Management Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books