Working Capital Management

Working capital = Current assets - Current Liabilities

• True

• False

Current assets is the asset that can be converted into cash within one year.

• False

• True

Current liabilities is the obligation owed by the firm that are expected to come due within one year.

• True

• False

Positive working capital shows that firm may not able to meet it current liabilities.

• False

• True

Below are all components of working capital except:

• Cash

• Marketable securities

• Inventories

• Note payable

Below are the reason for holding cash except:

• Transaction motive

• Speculative motive

• Retaining motive

• Compensating motive

Account receivable is

• Balance due from a customer

• Surplus paid by customer

Below are the elements of credit policy except:

• Cash discount

• Trade credit

• Credit period

• Credit standard

Inventories can be classified into

• Product, material, item

• Raw material, work in progress, and finished good

Cost of holding inventory are

• Carrying cost, ordering cost and cost of running short

• Storage cost, paying cost, and labor cost