This quiz works best with JavaScript enabled. Home > Corporate Finance > Working Capital Management – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 9 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The primary goal of working capital management is to: A) Maximize long-term profits. B) Minimize short-term borrowing. C) Maximize short-term profits. D) Maximize shareholder wealth. Show Answer Correct Answer: B) Minimize short-term borrowing. 2. Why is working capital crucial for businesses? A) It represents long-term investments in the company. B) It ensures high profitability at all times. C) It covers day-to-day operational expenses. D) It solely pertains to shareholders' equity. Show Answer Correct Answer: C) It covers day-to-day operational expenses. 3. R s saraiya committee is related to A) Indirect taxes. B) Agricultural finance and cooperative societies. C) Working capital finance to industry. D) Regional rural banks. Show Answer Correct Answer: B) Agricultural finance and cooperative societies. 4. Which of the following statement is correct A) A higher receivable turnover is not desirable. B) Interest coverage ratio depend upon tax rate. C) Increase in net profit ratio means increase in sales. D) Lower debt equity ratio means lower financial risk. Show Answer Correct Answer: D) Lower debt equity ratio means lower financial risk. 5. Working capital = Current assets-Current Liabilities A) True. B) False. Show Answer Correct Answer: A) True. 6. If company sales it's receivable to another party to raise funds, it is known as A) Forfeiting. B) Factoring. C) Pledge. D) None of above. Show Answer Correct Answer: B) Factoring. 7. A decrease in current assets and an increase in current liabilities will ..... net working capital, thereby ..... the risk of insolvency A) Increase; increasing. B) Decrease; increasing. C) Increase; reducing. D) Decrease; reducing. Show Answer Correct Answer: B) Decrease; increasing. 8. The cash conversion cycle is the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations. A) True. B) False. Show Answer Correct Answer: A) True. 9. Bad debt cost is not borne by factor in case of A) Pure factoring. B) Without recourse factoring. C) With recourse factoring. D) None of the above. Show Answer Correct Answer: C) With recourse factoring. 10. If cash discount is offered to customer, then which of the following would increase? A) Sales. B) Debtors. C) Debts Collection Period. D) All of above. Show Answer Correct Answer: A) Sales. 11. Credit policy of a firm should involve a trade off between increased A) Sales and increase profits. B) Profits and increased costs receivables. C) Sales and cost of goods sold. D) None of above. Show Answer Correct Answer: B) Profits and increased costs receivables. 12. Orange Company sells on terms 3/10, net 30. Total sales for the year are P900, 000. Forty percent of the customers pay on the tenth day and take discounts; the other 60 percent pay, on average, 45 days after their purchases. What is the average amount of receivables? A) Batah, 500. B) P70, 000. C) Bah, 200. D) Bah, 500. Show Answer Correct Answer: D) Bah, 500. 13. In deciding the appropriate level of current assets for the firm, management is confronted with A) A trade-off between profitability and risk. B) A trade-off between liquidity and marketability. C) A trade-off between equity and debt. D) A trade-off between short-term versus long-term borrowing. Show Answer Correct Answer: A) A trade-off between profitability and risk. 14. Identify the mode of production that is widely used in a production model and in the assembly operation? A) Round robin mode. B) Batch mode. C) Grid mode. D) Parallel mode. Show Answer Correct Answer: B) Batch mode. 15. Float management is related with A) Cash management. B) Inventory management. C) Receivable management. D) All of above. Show Answer Correct Answer: A) Cash management. 16. Which of the following are the "5-C's of Credit" ? A) Character, Capacity, Compensation, Collateral, Conditions. B) Character, Cash, Credit, Collateral, Collectability. C) Character, Capacity, Capital, Collateral, Conditions. D) Cash, Capacity, Capital, Compensation, Collectability. Show Answer Correct Answer: C) Character, Capacity, Capital, Collateral, Conditions. 17. Current assets is the asset that can be converted into cash within one year. A) False. B) True. Show Answer Correct Answer: B) True. 18. Working Capital Turnover measures the relationship of Working Capital with A) Fixed Assets. B) Purchases. C) Sales. D) Stock. E) Not aware of. Show Answer Correct Answer: A) Fixed Assets. 19. Baumol's Model of Cash Management attempts to: A) Minimise the holding cost. B) Minimization of transaction cost. C) Minimization of total cost. D) Minimization of cash balance. E) Not aware of. Show Answer Correct Answer: C) Minimization of total cost. 20. Marketable securities are primarily A) Equity Share. B) Preference Share. C) Fixed Deposit with Company. D) Short term debt investment. Show Answer Correct Answer: D) Short term debt investment. ← 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 10Working Capital Management Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books