POP QUIZ CHAPTER 3_MANAGEMENT OF WORKING CAPITAL

Net Working Capital refers to

• Total Current Assets

• Current Assets + Current Liabilities

• Current Assets - Current Liabilities

• Current Liabilities - Current Assets

Current liabilities are debts that have to be paid ________

• to buy more working capital

• in the next 5 years or more

• in order to buy a current asset

• in the next 12 months

Current Assets means

• Intangible Assets

• Assets used for long period

• Assets which can be converted in to cash with in one year

• None

Below are all components of current assets except:

• Cash

• Marketable securities

• Inventories

• Notes Payable

Account receivable is

• Surplus paid by customer

• Balance due from a customer

• Amount payable to suppliers

• None

Working Capital Strategies consist of All below, EXCEPT:

• Hedging

• Aggressive

• Speculative

• Conservative

The _________________ the amount of time between buying materials (inputs) to receiving payments from the customer the higher the risk to a firm.

• Longer

• Shorter

Anyone who has bought from a business without payment (buying on credit) is known as a _____________.

• Creditor

• Debtor

Obtaining too much external finance to improve working capital can make the problem worse.

• True

• False

The goal of working capital management is to ensure adequate cash flow for operations.

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