This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 12 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 12 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Trade credit is usually allowed for A) 3 days. B) 2 weeks. C) 6 months. D) 30 days. Show Answer Correct Answer: C) 6 months. 2. A conservative policy for financing working capital is one where short-term finance is used to fund: A) All of the fluctuating current assets, but no part of the permanent current assets. B) All of the fluctuating current assets and part of the permanent current assets. C) Part of the fluctuating current assets and part of the permanent current assets. D) Part of the fluctuating current assets, but no part of the permanent current assets. Show Answer Correct Answer: D) Part of the fluctuating current assets, but no part of the permanent current assets. 3. Current liabilities are debts that have to be paid ..... A) In the next 12 months. B) In the next 5 years or more. C) In order to buy a current asset. D) To buy more working capital. Show Answer Correct Answer: A) In the next 12 months. 4. What is cost of stock of Finished goods in Q.1 of test A) 204, 000. B) 20, 40, 000. C) 420, 000. D) None of these. Show Answer Correct Answer: B) 20, 40, 000. 5. Unsecured notes usually pay A) Fixed coupons. B) Floating coupons. C) No coupons. D) 6 and floating coupons. Show Answer Correct Answer: A) Fixed coupons. 6. In India commercial papers are issued as per the guidelines issued by A) Stock Exchange board of India. B) Reserve Bank of India. C) Forward market commission. D) None of above. Show Answer Correct Answer: B) Reserve Bank of India. 7. Which of the following factors, is least likely to be a main factors in deciding the collection methods used in the recovery of an over due account A) Amount overdue. B) Cost of credit. C) Cost of collection activity. D) Type of customer. Show Answer Correct Answer: B) Cost of credit. 8. The most basic requirement for a firm marketable securities A) Safety. B) Yielding. C) Marketability. D) None of Above. Show Answer Correct Answer: A) Safety. 9. All current assets of the company before deducting short-term liabilities and other obligations that must be fulfilled immediately are: A) Current Ratio. B) Acid Test Ratio. C) Absolute Liquidity Ratio. D) Net Working Capital. E) Gross Working Capital. Show Answer Correct Answer: E) Gross Working Capital. 10. If credit purchases are £5, 000 a day and the average accounts payable balance is £250, 000, calculate the average settlement period for accounts payable? A) 14 days. B) 50 days. C) 152 days. D) 183 days. Show Answer Correct Answer: B) 50 days. 11. Which of the following is considered a current liability on a company's balance sheet? A) Long-term loans. B) Accounts payable. C) Machinery. D) Common stock. Show Answer Correct Answer: B) Accounts payable. 12. Current liabilities is the obligation owed by the firm that are expected to come due within one year. A) True. B) False. Show Answer Correct Answer: A) True. 13. If a company's average inventory is £200, 000 and average cost of sales are £100, 000 a month, calculate the average inventories turnover period? A) 17 days. B) 73 days. C) 61 days. D) 140 days. Show Answer Correct Answer: C) 61 days. 14. The process of converting inventory into finished goods and eventually into sales and cash is called: A) Cash conversion cycle. B) Inventory conversion cycle. C) Operating cycle. D) Receivables conversion cycle. Show Answer Correct Answer: C) Operating cycle. 15. Below are the reason for holding cash except: A) Transaction motive. B) Speculative motive. C) Retaining motive. D) Compensating motive. Show Answer Correct Answer: C) Retaining motive. 16. Which of the following is/are direct costs associated with inventory?I. Acquisition costsII. Carrying costsIII. Order costs A) I only. B) I and II. C) II and III. D) I, II, and III. Show Answer Correct Answer: D) I, II, and III. 17. What is the formula for the Quick Ratio (Acid-Test Ratio)? A) (Current Assets-Current Liabilities) / Total Liabilities. B) (Current Assets-Inventory) / Current Liabilities. C) Current Assets / Current Liabilities. D) (Total Assets-Total Liabilities) / Total Assets. Show Answer Correct Answer: B) (Current Assets-Inventory) / Current Liabilities. 18. Which of the following refer to speculative balance? A) Reserve for unforeseen fluctuations. B) Reserve balance required by banks for providing loans. C) Enable the firm to take advantages of bargain purchases. D) Provide cash needed to conduct normal business operation. Show Answer Correct Answer: C) Enable the firm to take advantages of bargain purchases. 19. An organization would usually offer credit terms of 2/10, n/30 when A) The organization can borrow funds at a rate exceeding the annual interest cost. B) The organization can borrow funds at a rate less than the annual interest cost. C) The cost of capital approaches the prime rate. D) Most competitors are offering the same terms, and the organization has a shortage of cash. Show Answer Correct Answer: D) Most competitors are offering the same terms, and the organization has a shortage of cash. 20. Positive working capital shows that firm may not able to meet it current liabilities. A) False. B) True. Show Answer Correct Answer: A) False. ← 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