This quiz works best with JavaScript enabled. Home > Finance > Corporate Finance > Working Capital Management – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Collection float is made up of all of the following EXCEPT ..... A) Mail float. B) Availability float. C) Processing float. D) Disbursement float. Show Answer Correct Answer: D) Disbursement float. 2. The amount of current assets that varies with seasonal requirements is referred to as ..... working capital A) Temporary. B) Permanent. C) Gross. D) Net. Show Answer Correct Answer: A) Temporary. 3. Working capital management involves the management of all of a firm's assets and liabilities. A) False. B) True. Show Answer Correct Answer: A) False. 4. What comprises a company's working capital? A) Fixed assets. B) Long-term liabilities. C) Current assets and current liabilities. D) Shareholder's equity. Show Answer Correct Answer: C) Current assets and current liabilities. 5. Which of the following is true of net working capital? A) When current assets of a firm exceed its current liabilities, a firm is said to have positive net workingcapital. B) When current assets of a firm exceed its current liabilities, a firm is said to have negative net workingcapital. C) When current assets of a firm are less than its total assets, a firm is said to have positive net workingcapital. D) When current assets of a firm exceed its total assets, the firm is said to have negative net workingcapital. Show Answer Correct Answer: A) When current assets of a firm exceed its current liabilities, a firm is said to have positive net workingcapital. 6. A firm following an aggressive working capital strategy would A) Hold substantial amount of fixed assets. B) Minimize the amount of short-term borrowing. C) Minimize the amount of funds held invery liquid assets. D) Finance fluctuating assets with long-term financing. Show Answer Correct Answer: C) Minimize the amount of funds held invery liquid assets. 7. Which is not an example of inventory A) Machine. B) Raw material. C) Finished goods. D) Work in progress. Show Answer Correct Answer: A) Machine. 8. Securitization is related to conversion of A) Investment. B) Stock. C) Receivable. D) Creditors. Show Answer Correct Answer: C) Receivable. 9. Which is not a source of working capital A) Sale of current assets. B) Sale of non current assets. C) Sale of additional shares of capital stock. D) Long term borrowing. Show Answer Correct Answer: A) Sale of current assets. 10. The primary goal of working capital management is to: A) Maximize long-term profits. B) Maximize short-term profits. C) Minimize short-term borrowing. D) Maximize shareholder wealth. Show Answer Correct Answer: C) Minimize short-term borrowing. 11. 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. 12. 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. 13. Which of the following statement is correct A) Lower debt equity ratio means lower financial risk. B) Interest coverage ratio depend upon tax rate. C) Increase in net profit ratio means increase in sales. D) A higher receivable turnover is not desirable. Show Answer Correct Answer: A) Lower debt equity ratio means lower financial risk. 14. Working capital = Current assets-Current Liabilities A) False. B) True. Show Answer Correct Answer: B) True. 15. 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. 16. 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) Decrease; reducing. D) Increase; reducing. Show Answer Correct Answer: B) Decrease; increasing. 17. 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) False. B) True. Show Answer Correct Answer: B) True. 18. 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. 19. 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. 20. 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. 21. 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, 500. D) Bah, 200. Show Answer Correct Answer: C) Bah, 500. 22. 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. 23. 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. 24. 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. 25. Which of the following are the "5-C's of Credit" ? A) Character, Cash, Credit, Collateral, Collectability. B) Character, Capacity, Capital, Collateral, Conditions. C) Character, Capacity, Compensation, Collateral, Conditions. D) Cash, Capacity, Capital, Compensation, Collectability. Show Answer Correct Answer: B) Character, Capacity, Capital, Collateral, Conditions. 26. Current assets is the asset that can be converted into cash within one year. A) True. B) False. Show Answer Correct Answer: A) True. 27. Working Capital Turnover measures the relationship of Working Capital with A) Fixed Assets. B) Sales. C) Not aware of. D) Stock. E) Purchases. Show Answer Correct Answer: A) Fixed Assets. 28. Baumol's Model of Cash Management attempts to: A) Minimization of cash balance. B) Not aware of. C) Minimise the holding cost. D) Minimization of transaction cost. E) Minimization of total cost. Show Answer Correct Answer: E) Minimization of total cost. 29. Marketable securities are primarily A) Equity Share. B) Short term debt investment. C) Fixed Deposit with Company. D) Preference Share. Show Answer Correct Answer: B) Short term debt investment. 30. What is Cash Cost of Production in Q.1 of test: A) 26, 25, 000. B) 25, 62, 000. C) 26, 52, 000. D) None of these. Show Answer Correct Answer: B) 25, 62, 000. ← PreviousNext →Related QuizzesFinance QuizzesWorking Capital Management Quiz 1Working Capital Management Quiz 2Working Capital Management Quiz 3Working Capital Management Quiz 4Working Capital Management Quiz 5Working 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