This quiz works best with JavaScript enabled. Home > Finance > Corporate Finance > Working Capital Management – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 7 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Working capital management is concerned with managing: A) Long-term investments. B) Short-term assets and liabilities. C) Equity financing. D) Capital budgeting. Show Answer Correct Answer: B) Short-term assets and liabilities. 2. Money market financial services not include: A) Merchant Banking. B) Securitization. C) Bill Discounting. D) Leasing. Show Answer Correct Answer: A) Merchant Banking. 3. If credit sales are £52, 000 a week and the average accounts receivable balance is £200, 000, calculate the average settlement period for accounts receivable? A) 27 days. B) 74 days. C) 140 days. D) 117 days. Show Answer Correct Answer: A) 27 days. 4. A merchant will need working capital if: A) Intends to buy a new machine to increase its production capacity. B) The business premises need to be renovated/expanded to accommodate the increasing inventory of merchandise. C) Requires an increase in merchandise inventory due to increasing sales turnover, sales receivables. D) All the statements above are true. Show Answer Correct Answer: C) Requires an increase in merchandise inventory due to increasing sales turnover, sales receivables. 5. What is Economic Order Quantity? A) Optimum order size. B) Cost of Stock. C) Cost of an Order. D) Not aware of. E) Reorder level. Show Answer Correct Answer: A) Optimum order size. 6. A company's working capital is negative. What does this indicate? A) The company has a strong liquidity position. B) The company is very profitable. C) The company is in financial trouble. D) The company's assets are undervalued. Show Answer Correct Answer: C) The company is in financial trouble. 7. Permanent working capital are ..... A) Varies with seasonal need. B) Includes accounts payable. C) In the amount of current assets required to meet a firm long term minimum needs?. D) Includes fixed assets. Show Answer Correct Answer: C) In the amount of current assets required to meet a firm long term minimum needs?. 8. In Current Ratio, Current Assets are compared with: A) Fixed Assets. B) Equity Share Capital. C) Current Profit. D) Current Liabilities. Show Answer Correct Answer: D) Current Liabilities. 9. The following is the limitations of EOQ MODEL A) Demand may very through out the year. B) It assumes that the shortage space is unlimited. C) Prices of material change through out the year. D) All of the above. Show Answer Correct Answer: D) All of the above. 10. What is Cost of Raw material consumed A) 17, 82, 000. B) 17, 28, 000. C) 5, 58, 000. D) None of these. Show Answer Correct Answer: B) 17, 28, 000. 11. Which among the following is a quantity of a specific item that is ordered from the supplier and issued as a standard quantity to the production process? A) Safety stock. B) Lot size. C) Standard deviations. D) Inventory control. Show Answer Correct Answer: B) Lot size. 12. In ABC analysis system the B catagory stands for ..... A) Outstanding importance in value. B) Comparatively unimportant in values. C) Comparatively important in values. D) Average importance in values. Show Answer Correct Answer: D) Average importance in values. 13. The period from the acquisition of raw materials to the collection of accounts receivable is known as: A) Operating cycle. B) Cash conversion cycle. C) Debt collection period. D) Inventory turnover period. Show Answer Correct Answer: A) Operating cycle. 14. Under which type of bank borrowing can a borrower obtain credit from a bank against its bills A) Cash. B) Letter of credit. C) Purchase or discounting of billls. D) Working capital loan. Show Answer Correct Answer: C) Purchase or discounting of billls. 15. The basic objective of tandon committee recommendation is dead the dependence of industry on when should gradually A) Increase. B) Decrease. C) Remain stable. D) None of above. Show Answer Correct Answer: D) None of above. 16. Emergency Working Capital is..... A) The amount of working capital changes as a result of conjunctural fluctuations. B) Working capital required by a company to support the company's normal operations. C) Working capital caused by seasonal fluctuations. D) Working capital that changes due to unexpected events. E) The minimum working capital that a company must have to maintain or continue its life. Show Answer Correct Answer: D) Working capital that changes due to unexpected events. 17. Which of the following is not a standard methods of inventory valuation A) Fifo. B) Standard cost. C) Average pricing. D) Realizable value. Show Answer Correct Answer: C) Average pricing. 18. What is value of net working capital in Q.1 of test A) 30, 56, 750. B) 30, 65, 750. C) 30, 56, 570. D) None of these. Show Answer Correct Answer: A) 30, 56, 750. 19. Which of the following is a technique that helps the exporter to sell the receivable to any bank or financial institutions without recourse? A) Forfeiting. B) Leading and lagging. C) Derivatives. D) Netting. Show Answer Correct Answer: A) Forfeiting. 20. Which of the following statements is correct for an aggressive financing policy for a firm relative to a former conservative policy? A) The firm will see an increase in its expected profits. B) The firm will use long-term financing to finance all fixed and current assets. C) The firm will see a decline in its risk profile. D) The firm will need to issue additional common stock this period to finance the assets. Show Answer Correct Answer: A) The firm will see an increase in its expected profits. 21. The tool of treasury management do not include A) Risk management. B) Foreign exchange management. C) Receivable management. D) Cash management. Show Answer Correct Answer: A) Risk management. 22. Which among the following is a type of inventory system that is used to manage independent demand items A) Material requirements planning. B) Order point level. C) Time phased order point. D) Firms resource planning. Show Answer Correct Answer: C) Time phased order point. 23. Which of the following is not a current assets A) Accounts Receivable. B) Marketable Securities. C) Inventory. D) Creditors. Show Answer Correct Answer: D) Creditors. 24. Common share can be classified as ..... A) Permanent source. B) Temporary source. C) Spontaneous source. D) Permanent asset. E) Temporary asset. Show Answer Correct Answer: A) Permanent source. 25. What is the primary objective of an aggressive working capital policy? A) Holding higher levels of cash for future investments. B) Ensuring timely payment of long-term debts. C) Minimizing the risk of default on short-term obligations. D) Maximizing profitability at the expense of liquidity. Show Answer Correct Answer: D) Maximizing profitability at the expense of liquidity. 26. Which of the following is true of an aggressive funding strategy of a firm? A) Under an aggressive funding strategy, a firm funds it seasonal requirements with bonds and long termloans. B) Under an aggressive funding strategy, a firm funds its seasonal requirements with short-term debt. C) Under an aggressive funding strategy, a firm funds both its seasonal and its permanent requirementswith long-term debt. D) Under an aggressive funding strategy, a firm funds it permanent requirements with commercial paperand notes payable. Show Answer Correct Answer: B) Under an aggressive funding strategy, a firm funds its seasonal requirements with short-term debt. 27. The best suited deposit for trading community is A) Recurring deposit. B) Current deposit. C) Saving deposit. D) Fixed deposit. Show Answer Correct Answer: B) Current deposit. 28. Primary Working Capital is..... A) Working capital caused by seasonal fluctuations. B) The amount of working capital changes as a result of conjunctural fluctuations. C) Working capital required by a company to support the company's normal operations. D) Working capital that changes due to unexpected events. E) The minimum working capital that a company must have to maintain or continue its life. Show Answer Correct Answer: E) The minimum working capital that a company must have to maintain or continue its life. 29. A financial manager who wants her investment to have a higher return would choose to invest some of her firm's excess cash in commercial paper over Treasury bonds A) False. B) True. Show Answer Correct Answer: B) True. 30. Which financing method is commonly associated with an aggressive working capital policy? A) Long-term debt. B) Equity financing. C) Retained earnings. D) Short-term debt. Show Answer Correct Answer: D) Short-term debt. ← 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 6Working Capital Management Quiz 8Working Capital Management Quiz 9Working Capital Management Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books