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Working Capital Management Quiz 2 (30 MCQs)

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1. Which ratio measures a company's ability to meet its short-term obligations with its most liquid assets?
2. 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.)
3. Working capital is a short-term financial management.
4. To reduce the cash conversion cycle, companies.....
5. 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.)
6. 5Cs of the credit does not include
7. Which of the following is a component of disbursement float but not a component of collection float?
8. Day sales outstanding is the average length of time required to convert the firm's receivable into cash.
9. A company with a high current ratio is likely to have:
10. What is a potential downside of pursuing an aggressive approach to managing working capital?
11. Inventories can be classified into
12. The due date of a 60 days note receivable signed on April 17 is
13. The optimal level of working capital is achieved when:
14. Which of the following is not a benefit of carrying inventories
15. Working Capital Management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelations that exist between them.
16. What characterizes current assets?
17. Equipment can be classified as .....
18. What are the aspects of Working Capital Management?
19. Concept of maximum permissible Bank finance was introduced by
20. Which of the following is not an instrument traded in the money market
21. What is trade credit?
22. ..... function includes a firm's attempts to balance cash inflows andoutflows.
23. Working capital alters a firm's value by affecting its free cash flow.
24. Durable Furniture Company uses about 200, 000 yards of a particular fabric each year. The fabric costs P25 per yard. The current policy is to order the fabric four times a year. Incremental ordering costs are about P200 per order, and incremental carrying costs are about P0.75 per yard, much of which represents the opportunity costs of the funds tied up in inventory. How much total costs are associated with the current inventory policy?
25. What factor(s) typically influence the working capital requirements of a business?
26. The Camp Company has an inventory conversion period of 60 days, a receivable conversion period of 30 days and a payable turnover of 45 days. The Camp's variable cost ratio is 60% and annual fixed costs of P600, 000. The current cost of capital for Camp is 12%.If Camp's annual sales are P3, 375, 000 and all sales are on credit, what is the firm's carrying costs on accounts receivable, using 360 days year?
27. A computer plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and reduce the ratio of credit sales to total revenue from 70% to 60%. The company estimates that projected sales would be 5% less if the proposed new credit policy were implemented. The firm's short-term interest cost is 10%. Projected sales for the coming year are P50 million.Assume a 360-day year, calculate the peso impact on accounts receivable of this proposed change in credit policy?
28. Which of the following is not a part of credit policy
29. Reorder level is calculated by
30. Which is not the service of factors
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