This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Firms which are capital intensive rely on ..... A) Equity. B) Short term debt. C) Debt. D) Retained earnings. Show Answer Correct Answer: C) Debt. 2. To financial analysts, "working capital" means the same thing as ..... A) Total Asset. B) Fixed Asset. C) Current Asset. D) Current Assets minus Current Liabilities. E) Not aware of. Show Answer Correct Answer: C) Current Asset. 3. What is value of Creditors for purchases in Q.1 of test A) 651, 000. B) 156, 000. C) 561, 000. D) None of these. Show Answer Correct Answer: B) 156, 000. 4. Difference between the bank balance as per cash book and pass book may be due to A) Overdraft. B) Float. C) Factoring. D) None of the above. Show Answer Correct Answer: B) Float. 5. An increase in which of the following will reduce the need for working capital? A) Accounts payable. B) Accounts receivable. C) Inventory. D) Short-term loans. Show Answer Correct Answer: A) Accounts payable. 6. ABC analysis is useful for analy the inventory A) Based on their quantity. B) Based on e usage and values. C) Based on their physiical volume. D) All of the above. Show Answer Correct Answer: B) Based on e usage and values. 7. Corporate social responsibility means that the form has responsibilities in relation to objectives and people apart from the owner, included as other stakeholders are A) Regulators. B) Customers. C) General public. D) All of the above. Show Answer Correct Answer: D) All of the above. 8. A small retail business would most likely finance its merchandise inventory with A) Commercial paper. B) A terminal warehouse receipt loan. C) A line of credit. D) A chattel mortgage. Show Answer Correct Answer: C) A line of credit. 9. What is the primary goal of working capital management? A) Maximizing long-term profitability. B) Minimizing current assets. C) Minimizing current liabilities. D) Ensuring liquidity and solvency. Show Answer Correct Answer: D) Ensuring liquidity and solvency. 10. Which asset-liability combination would most likely result in the firm's having the greatest risk of technical insolvency? A) Increasing current assets while lowering current liabilities. B) Increasing current assets while incurring more current liabilities. C) Reducing current assets, increasing current liabilities, and reducing long-term debt. D) Replacing short-term debt with equity. Show Answer Correct Answer: C) Reducing current assets, increasing current liabilities, and reducing long-term debt. 11. Long term debt can be classified as ..... A) Permanent asset. B) Temporary asset. C) Permanent source. D) Temporary source. E) Spontaneous source. Show Answer Correct Answer: C) Permanent source. 12. If AA company have Non current asset RM1, 000, Account receivable RM1, 000 and inventories RM500. The company also get source of financing from listed preferred share RM1, 500 and short term debt from bank RM1, 000. What is the approach being used by AA company? A) Hedging approach. B) Conservative approach. C) Aggressive approach. D) None of above. Show Answer Correct Answer: B) Conservative approach. 13. Out of the following, what is not true in respect of factoring A) Continuous arrangement between factor and saller. B) Sales of receivable to the factor. C) Factor provide cost free finance to seller. D) None of the above. Show Answer Correct Answer: C) Factor provide cost free finance to seller. 14. Aggressive funding strategies, apart from producing lower funding costs than conservative funding strategies, also result in lower company risk. The statement: A) Correct. B) Salah. Show Answer Correct Answer: B) Salah. 15. Accrued expenses can be classified as ..... A) Permanent asset. B) Temporary asset. C) Permanent source. D) Temporary source. E) Spontaneous source. Show Answer Correct Answer: E) Spontaneous source. 16. A firm's credit terms specify "1/10 net 30" and the accounts receivable days outstanding is 32 days. Which of the following can be concluded on the basis of this information? A) Most customers pay on time. B) The average customer pays two days late. C) All customers have paid within 32 days of purchase. D) All customers pay late. Show Answer Correct Answer: B) The average customer pays two days late. 17. Working capital, sometimes called gross working capital is defined as current assets minus current liabilities. A) True. B) False. Show Answer Correct Answer: A) True. 18. Which of the following is a part of working capital? A) Machinery. B) Inventory. C) Debentures. D) Land and Building. Show Answer Correct Answer: B) Inventory. 19. Which factor is not typically considered when determining level of working capital? A) Type of business. B) Volume of sales. C) Seasonality. D) Long-term capital structure. Show Answer Correct Answer: D) Long-term capital structure. 20. What is cost of stock of Work in progress in Q.1 of test A) 750, 000. B) 570, 000. C) 75000. D) None of these. Show Answer Correct Answer: A) 750, 000. ← PreviousNext →Related QuizzesWorking Capital Management Quiz 1Working Capital Management Quiz 2Working Capital Management Quiz 3Working Capital Management Quiz 4Working 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