Top 100 Quiz Questions and Answers Working On Capital Management

Top 100 Quiz Questions and Answers Working On Capital Management

If a company has a negative working capital, it is said to be in a state of operating cash flow deficit. Working capital is a term used to describe the current assets held by a business in contrast to long term assets and is used as a tool in business management.

When a business has low working capital, it usually means that the business has enough assets to make it through the next few months but not years. For example, a small business that has a cash flow deficit is not going to be able to make it for a year if it does not turn its deficit into a profit.

A company’s working capital turnover ratio measures how efficiently a company uses its working capital to generate revenue. The ratio is calculated by dividing revenue by average current assets; the result is expressed as revenue per average current assets.

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Top 100 Quiz Questions and Answers Working On Capital Management

Working Capital Management MCQs

  1. Investment in current assets should be _

A. just adequate

B. more

C. less

D. maximum

Answer: just adequate

  1. _ varies inversely with profitability.

A. Risk

B. Assets

C. Liquidity

D. Revenue

Answer: Liquidity

  1. Capital intensive firms rely on __

A. debt

B. retained earnings

C. short term debts

D. Equity

Answer: debt

  1. On the basis of _, working capital is classified as gross working capital and net working capital.

A. concept

B. time

C. future

D. work

Answer: concept

  1. __ cycle analyzes the accounts receivable, inventory, and accounts payable cycles in terms of a number of days?

A. Business

B. Current asset

C. Operation

D. Operating

Answer: Operating

  1. _ method is not used for calculating working capital cycle.

A. Trial and error method

B. Regression analysis method

C. Percentage of sales method

D. Operating cycle approach

Answer: Trial and error method

  1. On the basis of _, working capital may be classified as: 1) Permanent or fixed working capital. 2) Temporary or variable working capital.

A. concept

B. time

C. future

D. work

Answer: time

  1. Operating cycle is also called as _

C. Working cycle

A. Business cycle

D. Current asset cycle

B. Working capital cycle

Answer: Working capital cycle

  1. Spontaneous financing consists of __

A. a line of credit

B. short-term loans

C. accounts receivable

D. accounts payable

Answer: accounts payable

Quiz Questions and Answers Working Capital Management

  1. The major current assets are _

A. cash and marketable securities

B. accounts receivable (debtors)

C. inventory (stock)

D. All of the above

Answer: All of the above

  1. The basic current liabilities are _

A. accounts payable and bills payable

B. bank overdraft

C. outstanding expenses.

D. All of the above

Answer: All of the above

  1. There are two concepts of working capital – gross and __

A. Zero

B. Net

C. Cumulative

D. distinctive

Answer: Net

  1. Working capital is also known as___ capital.

A. current asset

B. Operating

C. projecting

D. Operation capital

Answer: Operating

  1. __ working Capital refers to the firm’s investment in current assets.

A. Zero

B. Net

C. Gross

D. Distinctive

Answer: Gross

  1. In finance, “working capital” means the same thing as _ assets.

A. Current

B. Fixed

C. Total

D. All of the above

Answer: Current

  1. Working capital is calculated as _

A. Core current assets less core current liabilities

B. Current assets less current liabilities

C. Core current assets less current liabilities

D. Liquid assets less current liabilities

Answer: Current assets less current liabilities

  1. __ working capital refers to the difference between current assets and current liabilities.

A. Zero

B. Net

C. Gross

D. Distinctive

Answer: Net

  1. A _ net working capital will arise when current assets exceed current liabilities.

A. Summative

B. Negative

C. Excessive

D. Positive

Answer: Positive

  1. A __ net working capital occurs when current liabilities are in excess of current assets.

A. Positive

B. Negative

C. Excessive

D. Zero

Answer: Negative

  1. _____is not an advantages of trade credit.

A. buyout financing

B. informality

C. easy availability

D. flexibility

Answer: buyout financing

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