This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 13 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 13 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ABC Analysis is useful for analyzing the inventories A) Based on their Quality. B) Based on their Usage and value. C) Based on Physical Volume. D) All of the above. E) Not aware of. Show Answer Correct Answer: B) Based on their Usage and value. 2. The three steps in establishing a credit policy are establishing credit standards, establishing credit terms, and establishing a collection policy. A) True. B) False. Show Answer Correct Answer: A) True. 3. In a recessionary economic environment, what adjustment to working capital policy might a company consider? A) Shifting to a more aggressive policy to stimulate growth. B) Adopting a conservative policy to minimize risk exposure. C) Maintaining the current policy without alterations. D) Increasing long-term debts for immediate cash infusion. Show Answer Correct Answer: B) Adopting a conservative policy to minimize risk exposure. 4. The time period between placing an order it's receipt in stock is known as A) Lead time. B) Carrying time. C) Shortage time. D) Over time. Show Answer Correct Answer: A) Lead time. 5. The quality of credit extended to customer is a multidimensional concept involving which of the following ..... A) Average collection period. B) Bad debt loss ratio. C) A and B. D) None of above. Show Answer Correct Answer: C) A and B. 6. Receivable management deals with A) Receipt of raw material. B) Debtor collection period. C) Credit management. D) Inventory management. Show Answer Correct Answer: B) Debtor collection period. 7. Casie Company turns out 200 calculators a day at a cost of P250 per calculator for materials and variable conversion cost. It takes the firm 18 days to convert raw materials into calculator. Casie's usual credit terms extended to its customers is 30 days, and the firm generally pays its suppliers in 20 days. If the foregoing cycles are constant, what amount of working capital must Casie Company finance? A) P900, 000. B) P1, 400, 000. C) P1, 800, 000. D) Ba, 400, 000. Show Answer Correct Answer: B) P1, 400, 000. 8. Obtaining too much external finance to improve working capital can make the problem worse. A) True. B) False. Show Answer Correct Answer: A) True. 9. As a credit manager, you are responsible for ensuring that invoices are paid on time. Which of the following best describes your area of responsibility A) Account payable. B) Account receivable. C) Fixed assets. D) Share capital. Show Answer Correct Answer: B) Account receivable. 10. Which of the following is a non-spontaneous source of short-term financing for working capital? A) Trade credits. B) Bank Loans. C) Accounts Payables. D) Customer Advances. Show Answer Correct Answer: B) Bank Loans. 11. Which of the following illustrates the use of a hedging( matching ) approach to financing? A) Short term assets financed with long term liabilities. B) Permanent working capital financing with long term liabilities. C) Short term assets financed with equity. D) All assets finance with a 50 percent equity and 50 percent long term debt mixture. Show Answer Correct Answer: B) Permanent working capital financing with long term liabilities. 12. What happens when a company neglects managing its working capital effectively? A) It boosts profitability instantly. B) It might face liquidity issues or even bankruptcy. C) It leads to increased shareholder wealth. D) It guarantees long-term sustainability. Show Answer Correct Answer: B) It might face liquidity issues or even bankruptcy. 13. In managing the level of working capital which of the following is generally not a concern A) The cost and risk of long-term funding. B) The need to maintain liquidity. C) The need to earn the required rate of return on the assets. D) None of the above. Show Answer Correct Answer: A) The cost and risk of long-term funding. 14. Cheque deposited in Bank may not be available for immediate use due to ..... A) Payment float. B) Receipt float. C) Net float. D) None of above. Show Answer Correct Answer: B) Receipt float. 15. Non current asset can be classified as ..... A) Permanent asset. B) Temporary asset. C) Permanent source. D) Temporary source. E) Spontaneous source. Show Answer Correct Answer: A) Permanent asset. 16. An effective inventory management minimise the investment in inventory by effectively meeting the ..... A) Functional requirements. B) Customer requirements. C) Process reliability. D) Potential value. Show Answer Correct Answer: A) Functional requirements. 17. Marketable securities can be classified as ..... A) Permanent asset. B) Temporary asset. C) Permanent source. D) Temporary source. E) Spontaneous source. Show Answer Correct Answer: B) Temporary asset. 18. Compensating balances are held to enable the firm to take advantage of bargain purchases. A) True. B) False. Show Answer Correct Answer: B) False. 19. Gross working capital consisted with A) Total Assets. B) Total fixed Assets. C) Total Current assets. D) All of above. Show Answer Correct Answer: D) All of above. 20. Which of the following is not an objective of cash management? A) Maximization of cash balance. B) Minimization of cash balance. C) Optimization of cash balance. D) Zero cash balance. E) Not aware of. Show Answer Correct Answer: C) Optimization of cash balance. ← 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