This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 14 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Below that does not include Working Capital is..... A) What. B) Valuable Letters. C) Own money. D) Receivables. E) Preparation. Show Answer Correct Answer: C) Own money. 2. What is cash Cost of Sales in Q.1 of test A) 46, 92, 000. B) 612, 000. C) 216, 000. D) None of these. Show Answer Correct Answer: B) 612, 000. 3. Operating Cycle indicate the length of time between a company's paying for materials, entering into stock and receiving the cash from sale of finished goods. " Whether this statement is A) True. B) False. C) Neither true nor false. D) None of these. Show Answer Correct Answer: A) True. 4. Inventory 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. 5. The Transaction Motive for holding cash is for ..... A) Safety Cushion. B) Daily Operations. C) Purchase of Assets. D) Payments of Dividends. Show Answer Correct Answer: B) Daily Operations. 6. Apple Inc. has a total annual cash requirement of P9, 075, 000 which are to be paid uniformly. Simile has the opportunity to invest the money at 24% per annum. The company spends, on the average, P40 for every cash conversion to marketable securities.What is the optimal cash conversion size? A) P 45, 000. B) P 60, 000. C) P 55, 000. D) P 72, 500. Show Answer Correct Answer: C) P 55, 000. 7. The company's current assets are IDR 315, 000, 000 and its current liabilities are IDR 205, 000, 000, so the amount of gross working capital is..... A) 110.000.000. B) 315.000.000. C) 520.000.000. D) There is no right answer. Show Answer Correct Answer: B) 315.000.000. 8. Boumol's model of cash management attempts to A) Minimize the holding cost. B) Minimization of transaction Cost. C) Minimization of total cost. D) Minimization of cash balance. Show Answer Correct Answer: C) Minimization of total cost. 9. To achieve ....., ..... in purchasing and transportation, goods may be purchased in larger quantities than the actual demand A) Continution. B) Quality. C) Cost effectiveness. D) Potential value. Show Answer Correct Answer: C) Cost effectiveness. 10. ....., ., ..... Are the criteria a company uses to screen credit applicants in order to determine which of it's customers should be offered credit and how much. A) Carrying cost. B) Ordering cost. C) Credit standard. D) Stoch out cost. Show Answer Correct Answer: C) Credit standard. 11. If the ratio of current assets to total assets increases, then the company's ability to pay its current liabilities will increase, because net working capital also increases. The statement: A) Correct. B) Salah. Show Answer Correct Answer: A) Correct. 12. What is a working capital? A) It is the capital used for running day-to-day operations. B) It is referred to as circulating capital. C) Both. D) None of above. Show Answer Correct Answer: C) Both. 13. Compared to other firms in the industry, a company that maintains a conservative working capital policy will tend to have a A) Greater percentage of short-term financing. B) Greater risk of needing to sell current assets to repay debt. C) Higher ratio of current assets to fixed assets. D) Higher total asset turnover. Show Answer Correct Answer: C) Higher ratio of current assets to fixed assets. 14. Which of the following would be consistent with a more aggressive approach to financing working capital? A) Financing short-term needs with short-term funds. B) Financing permanent inventory buildup with long-term debt. C) Financing seasonal needs with short-term funds. D) Financing some long-term needs with short-term funds. Show Answer Correct Answer: D) Financing some long-term needs with short-term funds. 15. It is the difference between operating current assets and operating current liabilities. A) Net Operating Working Capital. B) Permanent/Fixed Working Capital. C) Net Working Capital. D) None of above. Show Answer Correct Answer: A) Net Operating Working Capital. 16. Net working capital is defined as ..... A) Total assets minus total liabilities. B) Total liabilities minus total assets. C) Current liabilities minus current assets. D) Current assets minus current liabilities. Show Answer Correct Answer: D) Current assets minus current liabilities. 17. The cash conversion cycle is determined by three components, including ..... A) A. Average age of inventory. B) B. Accounts receivable collection period. C) Answers a and b are correct. D) Answers a and b are incorrect. Show Answer Correct Answer: C) Answers a and b are correct. 18. When the ratio of current liabilities to total assets increases, the risk of bankruptcy decreases because an increase in current liabilities will increase net working capital. The statement: A) Correct. B) Salah. Show Answer Correct Answer: B) Salah. 19. Which working capital policy takes a moderate approach, maintaining a balance between risk and profitability? A) Aggressive policy. B) Conservative Policy. C) Hedging policy. D) Matching Policy. Show Answer Correct Answer: D) Matching Policy. 20. Which of the following is an example of a temporary source of financing used by businesses to cover short-term needs? A) Long-term bank loans. B) Issuing common share. C) Short term notes payable. D) Wages and salaries payable. Show Answer Correct Answer: C) Short term notes payable. ← 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