This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 15 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 15 (18 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If the ratio of current asset/total asset increasing profit will increase but risk will decrease. A) True. B) False. Show Answer Correct Answer: A) True. 2. Financing a long-lived asset with short-term financing would be A) An example of "moderate risk moderate (potential) profitability" asset financing. B) An example of "low risk low (potential) profitability" asset financing. C) An example of "high risk high (potential) profitability" asset financing. D) An example of the "hedging approach" to financing. Show Answer Correct Answer: C) An example of "high risk high (potential) profitability" asset financing. 3. Evertz Metals buys and stockpiles dolomite to use in its smelting processes. Before all this dolomite is used, however, they alter their smelting process so that calcite limestone is used instead. How is the inventory cost of the unused dolomite best categorized? A) An acquisition cost. B) A carrying cost. C) An order cost. D) A holding cost. Show Answer Correct Answer: B) A carrying cost. 4. Which of the following working capital management strategies focuses on minimizing the investment in current assets while maintaining a reasonable level of liquidity? A) Aggressive working capital policy. B) Conservative working capital policy. C) Moderate working capital policy. D) Neutral working capital policy. Show Answer Correct Answer: B) Conservative working capital policy. 5. The period when credit is outstanding has to financed, which of the following methods will not assist the financing of credit? A) Bank over draft. B) Factoring and invoice discounting. C) Purchase of fixed assets. D) Operational cash flow. Show Answer Correct Answer: C) Purchase of fixed assets. 6. Suppose ABC Ltd has been offered credit terms from its major supplier of 2/10, net 45 days. What is the cost of NOT taking the discount? A) 23.5%. B) 10.9%. C) 14.3%. D) 17.8%. Show Answer Correct Answer: A) 23.5%. 7. The goal of cash management is to achieve the following except: A) To take trade discount. B) To maintain its credit rating. C) To meet unexpected cash needed. D) Minimized the amount of cash the firm must hold. Show Answer Correct Answer: D) Minimized the amount of cash the firm must hold. 8. Float management is related to A) Cash management. B) Receivable management. C) Inventory management. D) None of above. Show Answer Correct Answer: A) Cash management. 9. Trade Receivables are expected to be released in cash within the normal operating cycle or one year. A) True. B) False. Show Answer Correct Answer: A) True. 10. Which of the following is not considered by MIller-Orr MOdel A) Variability in cash requirement. B) Cost of transaction. C) Holding Cost. D) Total annual requirement of cash. Show Answer Correct Answer: D) Total annual requirement of cash. 11. The company's current assets are IDR 415, 000, 000 and its current liabilities are IDR 305, 000, 000, so the amount of net working capital is..... A) 210.000.000. B) 415.000.000. C) 620.000.000. D) There is no right answer. Show Answer Correct Answer: A) 210.000.000. 12. Below are all components of working capital except: A) Cash. B) Marketable securities. C) Inventories. D) Note payable. Show Answer Correct Answer: D) Note payable. 13. Which among the following components is calculated as the sum of the fixed cost that happen each time an item is ordered A) Carrying cost. B) Ordering cost. C) Holding cost. D) Storing cost. Show Answer Correct Answer: B) Ordering cost. 14. Firms typically would prefer a positive cash conversion cycle versus a negative cash conversion cycle. A) True. B) False. Show Answer Correct Answer: B) False. 15. The restricted current asset investment policy offers the lowest expected return coupled with the lowest risk. A) True. B) False. Show Answer Correct Answer: B) False. 16. Which of the following is not a component of current assets? A) Inventory. B) Accounts Receivable. C) Land and Buildings. D) Cash. Show Answer Correct Answer: C) Land and Buildings. 17. What does a negative working capital indicate? A) Financial distress. B) Efficient operations. C) Strong profitability. D) Excessive liquidity. Show Answer Correct Answer: A) Financial distress. 18. Which of the following is not a type of current liability A) Payables. B) Receivables. C) Both A and B. D) None of above. Show Answer Correct Answer: B) Receivables. ← PreviousRelated 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