Working capital Management

Multiple Choice

Working capital management focuses on the current assets and long term liabilities that determine the liquidity.

Multiple Choice

Net working capital is the difference between current assets and current liabilities.

Multiple Choice

Positive net working capital shows that the company is solvent.

Multiple Choice

Current assets consist of cash, marketable securities, notes payable and inventories.

Multiple Choice

A higher level of sales will require a higher level of working capital.

Multiple Choice

What is working capital?

• Fixed assets

• Current assets - Current liabilities
  

• Total assets

• Long-term debt

Multiple Choice

What factor(s) typically influence the working capital requirements of a business?

• Seasonality, operating cycle, and sales growth

• Long-term investments and equity financing

• Shareholder dividends and corporate tax rates

• Employee training programs and office infrastructure

Multiple Choice

The difference between a firm's operating cycle and its cash cycle is ________.

• its account receivable days

• There is no difference between the cash and operating cycles.

• its inventory days

• its accounts payable days

Multiple Choice

A firm has an average age of inventory of 101 days, an average collection period of 49 days, and an average payment period of 60 days. The firmʹs cash conversion cycle is ________ days

• 90

• 60

• 52

• 41

Multiple Choice

A firm has a cash conversion cycle of 120 days, an average collection period of 25 days, and an average payment period of 50 days. The firmʹs average age of inventory is ________ days

• 45

• 95

• 125

• 145

Multiple Choice

firm has an average age of inventory of 90 days, an average collection period of 40 days, and an average payment period of 30 days. The firmʹs operating cycle is ________ days

• 110

• 130

• 120

• 70