This quiz works best with JavaScript enabled. Home > Finance > Corporate Finance > Working Capital Management – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. On the balance sheet of a company it is written that total current assets are 600, 000, and total current liabilities are 400, 000. So the amount of working capital according to the quantitative concept is equal to A) 200.000. B) 1.000.000. C) 600.000. D) 1.200.000. Show Answer Correct Answer: C) 600.000. 2. What are the various methods of estimating cash? A) Receipts and payment method. B) Adjusted profit & loss method. C) Balance sheet method. D) All of the above. E) Not aware of. Show Answer Correct Answer: A) Receipts and payment method. 3. Costs that include explicit costs and implicit costs are costs A) Sales Costs. B) Purchase Costs. C) Transaction Fees. D) Operating costs. Show Answer Correct Answer: C) Transaction Fees. 4. Working capital management is the management of current assets and fixed asset A) True. B) False. Show Answer Correct Answer: B) False. 5. Which of the following is not a way in which secondary market supports primary market A) Facilitating risk management. B) Providing security for holders of issued securities. C) Underwriting new issues of securities. D) Providing a price Discovery mechanism for primary market when new issues are contemplated. Show Answer Correct Answer: C) Underwriting new issues of securities. 6. Cash budget does not consist A) Credit transaction. B) Cash transaction. C) A and B. D) None of Above. Show Answer Correct Answer: A) Credit transaction. 7. Cash discount terms offered by trade creditors never be accepted because A) Benefit in every small. B) Cost is very high. C) No sense to pay earlier. D) None of above. Show Answer Correct Answer: D) None of above. 8. What of the following best describes just-in-time inventory management? A) Inventory is maintained as a buffer to meet uncertainties in demand, supply, and movements of goods. B) Production inefficiencies arising when production capacity stands idle for lack of materials are minimized by holding a small stock of essentials at all times. C) A firm acquires inventory precisely when needed so that its inventory balance is always at, or close to, zero. D) A firm minimizes the time lags present in the supply chain by maintaining a certain amount of inventory to use in these lag times. Show Answer Correct Answer: C) A firm acquires inventory precisely when needed so that its inventory balance is always at, or close to, zero. 9. Profitability is the relationship between income and costs generated by using company assets, both current assets and fixed assets in productive activities. The statement: A) Correct. B) Salah. Show Answer Correct Answer: A) Correct. 10. If a company moves from a "conservative" working capital policy to an "aggressive" policy, it should expect ..... A) Expected profitability to increase, whereas risk would decrease. B) Liquidity to decrease, whereas expected profitability would increase. C) Risk and profitability to decrease. D) Liquidity would increase, whereas risk would also increase. Show Answer Correct Answer: B) Liquidity to decrease, whereas expected profitability would increase. 11. The working capital situation of a firm can be improved by obtaining ..... forms of ..... term finance. A) Internal, long. B) External, short. Show Answer Correct Answer: B) External, short. 12. Account receivable is A) Balance due from a customer. B) Surplus paid by customer. C) Amount payable to suppliers. D) None. Show Answer Correct Answer: A) Balance due from a customer. 13. The banks are required to maintain a certain ratio between the liquid assets and total deposits this ratio is called A) CAR. B) CLR. C) SLR. D) CRR. Show Answer Correct Answer: C) SLR. 14. Which of the following is a discount security A) Commercial bills. B) Debentures. C) Shares. D) Corporate bonds. Show Answer Correct Answer: A) Commercial bills. 15. Which of the following is not an authorised Deposit taking institution A) Credit Union. B) Merchant banks. C) Bank. D) A building societies. Show Answer Correct Answer: B) Merchant banks. 16. The policy of maintaining a higher level of current assets to meet unexpected fluctuations in demand or supply is known as: A) Conservative working capital policy. B) Moderate working capital policy. C) Neutral working capital policy. D) Aggressive working capital policy. Show Answer Correct Answer: A) Conservative working capital policy. 17. Which of the following organisations is known as the market regulator in India A) SEBI. B) DIFFERENT. C) Sdal. D) AMFI. Show Answer Correct Answer: A) SEBI. 18. A company that maintain a sufficient safety margin by having extra inventory against certain situations are termed as ..... A) Inventory. B) Lot size. C) Lead. D) Safety stock. Show Answer Correct Answer: D) Safety stock. 19. The difference between a firm's operating cycle and its cash cycle is ..... A) Its account receivable days. B) Its accounts payable days. C) Its inventory days. D) There is no difference between the cash and operating cycles. . Show Answer Correct Answer: B) Its accounts payable days. 20. Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to ..... A) Meet its cash obligations as they occur and take advantage of prompt payment discounts. B) Support the proper level of sales and take prompt payment discounts. C) Maintain current and acid-test ratios at or above industry norms. D) Meet its cash obligations as they occur and support the proper level of sales. E) Not aware of. Show Answer Correct Answer: D) Meet its cash obligations as they occur and support the proper level of sales. 21. Firms which are capital intensive rely on ..... A) Retained earnings. B) Debt. C) Equity. D) Short term debt. Show Answer Correct Answer: B) Debt. 22. To financial analysts, "working capital" means the same thing as ..... A) Total Asset. B) Current Assets minus Current Liabilities. C) Not aware of. D) Fixed Asset. E) Current Asset. Show Answer Correct Answer: E) Current Asset. 23. 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. 24. 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. 25. An increase in which of the following will reduce the need for working capital? A) Accounts receivable. B) Inventory. C) Short-term loans. D) Accounts payable. Show Answer Correct Answer: D) Accounts payable. 26. 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. 27. 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. 28. A small retail business would most likely finance its merchandise inventory with A) A terminal warehouse receipt loan. B) A chattel mortgage. C) A line of credit. D) Commercial paper. Show Answer Correct Answer: C) A line of credit. 29. 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. 30. 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. ← PreviousNext →Related QuizzesFinance QuizzesWorking Capital Management Quiz 1Working Capital Management Quiz 2Working 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