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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Working Capital Management MCQs
- Investment in current assets should be _
A. just adequate
B. more
C. less
D. maximum
Answer: just adequate
- _ varies inversely with profitability.
A. Risk
B. Assets
C. Liquidity
D. Revenue
Answer: Liquidity
- Capital intensive firms rely on __
A. debt
B. retained earnings
C. short term debts
D. Equity
Answer: debt
- 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
- __ 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
- _ 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
- 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
- Operating cycle is also called as _
C. Working cycle
A. Business cycle
D. Current asset cycle
B. Working capital cycle
Answer: Working capital cycle
- 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
- 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
- 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
- There are two concepts of working capital – gross and __
A. Zero
B. Net
C. Cumulative
D. distinctive
Answer: Net
- Working capital is also known as___ capital.
A. current asset
B. Operating
C. projecting
D. Operation capital
Answer: Operating
- __ working Capital refers to the firm’s investment in current assets.
A. Zero
B. Net
C. Gross
D. Distinctive
Answer: Gross
- In finance, “working capital” means the same thing as _ assets.
A. Current
B. Fixed
C. Total
D. All of the above
Answer: Current
- 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
- __ working capital refers to the difference between current assets and current liabilities.
A. Zero
B. Net
C. Gross
D. Distinctive
Answer: Net
- A _ net working capital will arise when current assets exceed current liabilities.
A. Summative
B. Negative
C. Excessive
D. Positive
Answer: Positive
- A __ net working capital occurs when current liabilities are in excess of current assets.
A. Positive
B. Negative
C. Excessive
D. Zero
Answer: Negative
- _____is not an advantages of trade credit.
A. buyout financing
B. informality
C. easy availability
D. flexibility
Answer: buyout financing