This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is Cash Factory Cost in Q.1 of test A) 43, 02, 000. B) 34, 02, 000. C) 34, 20, 000. D) None of these. Show Answer Correct Answer: B) 34, 02, 000. 2. Net operating working capital is defined as: A) Current assets used in operations. B) Current assets minus current liabilities. C) Current assets divided by current liabilities. D) Current assets minus non-interest bearing current liabilities. Show Answer Correct Answer: B) Current assets minus current liabilities. 3. Which of the following is not a motive to hold cash? A) Transactionary Motive. B) Pre-scautionary Motive. C) Capital Investment. D) None of the above. E) Not aware of. Show Answer Correct Answer: C) Capital Investment. 4. What represents a permanent source of financing for a company? A) Short-term bank loans. B) Trade credit. C) Common Share. D) Commercial paper. Show Answer Correct Answer: C) Common Share. 5. To financial analysts, "Working Capital" means the same as: A) Current Assets-Total Liabilities. B) Total Assets-Current Liabilities. C) Total Assets-Total Liabilities. D) Current Assets-Current Liabilities. Show Answer Correct Answer: D) Current Assets-Current Liabilities. 6. Below are the elements of credit policy except: A) Cash discount. B) Trade credit. C) Credit period. D) Credit standard. Show Answer Correct Answer: B) Trade credit. 7. Buffer stock is the level of stock A) Half of the actual stock. B) At which the ordering process should start. C) Minimum stock level below which actual. D) Maximum stock in inventory. Show Answer Correct Answer: C) Minimum stock level below which actual. 8. Activities related to coordinating, controlling and planning flow of inventory are classified as A) Decisional management. B) Throughput management. C) Inventory management. D) Manufacturing Management. Show Answer Correct Answer: C) Inventory management. 9. Which of the following is a liability of a bank A) Treasury bills. B) Commercial papers. C) Certificate of deposits. D) Junk bonds. Show Answer Correct Answer: C) Certificate of deposits. 10. Concentration banking helps in A) Reducing idle bank balance. B) Increasing collections. C) Increasing craters. D) Reducing Bank transactions. Show Answer Correct Answer: B) Increasing collections. 11. Which ratio measures a company's ability to meet its short-term obligations with its most liquid assets? A) Quick Ratio. B) Current Ratio. C) Debt to Equity Ratio. D) Return on Investment (ROI). Show Answer Correct Answer: A) Quick Ratio. 12. Banana Supplies, Inc. has P5 million in inventory and P2 million in accounts receivable. Its average daily sales are P100, 000. The company has P1.5 million in accounts payable. Its average daily purchases are P50, 000. What is the length of the company's cash conversion period? (Use 360 days.) A) 20 days. B) 30 days. C) 40 days. D) 50 days. Show Answer Correct Answer: C) 40 days. 13. Working capital is a short-term financial management. A) True. B) False. Show Answer Correct Answer: A) True. 14. To reduce the cash conversion cycle, companies..... A) A. speed up the production and sales process. B) B. slow down payment of accounts payable. C) Answers a and b are correct. D) Answers a and b are wrong. Show Answer Correct Answer: C) Answers a and b are correct. 15. Banana Supplies, Inc. has P5 million in inventory and P2 million in accounts receivable. Its average daily sales are P100, 000. The company has P1.5 million in accounts payable. Its average daily purchases are P50, 000. What is the length of the company's inventory conversion period? (Use 360 days.) A) 40 days. B) 50 days. C) 90 days. D) 120 days. Show Answer Correct Answer: B) 50 days. 16. 5Cs of the credit does not include A) Colleterals. B) Conditions. C) Character. D) None of the above. E) Not aware of. Show Answer Correct Answer: D) None of the above. 17. Which of the following is a component of disbursement float but not a component of collection float? A) Availability float. B) Mail float. C) Processing float. D) Check-clearing float. Show Answer Correct Answer: D) Check-clearing float. 18. Day sales outstanding is the average length of time required to convert the firm's receivable into cash. A) True. B) False. Show Answer Correct Answer: A) True. 19. A company with a high current ratio is likely to have: A) Excessive liquidity. B) Insufficient liquidity. C) High profitability. D) Low profitability. Show Answer Correct Answer: A) Excessive liquidity. 20. What is a potential downside of pursuing an aggressive approach to managing working capital? A) Decreased risk of insolvency. B) Lower interest expenses. C) More difficult access to long-term financing. D) Faster inventory turnover. Show Answer Correct Answer: C) More difficult access to long-term financing. ← PreviousNext →Related QuizzesWorking Capital Management Quiz 1Working 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 10Working Capital Management Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books