Quiz Management of Working Capital (FM)

Current Assets consist of cash, marketable securities, account receivable, notes payable and inventories.

• True
• False

Current Liabilities are represnted by accounts payable, accruals, short-term loans.

• True
• False

Working Capital is commonly referred to as net current assets.

• True
• False

Current liabilities can reduce the risk of insolvency of the firm.

• True
• False

Temporary current assets are assets that fluctuate with seasonal or cyclical variations in a firms's business.

• True
• False

Spontaneous sources of financing consist of financing that has been scheduled in the firm's day to day operations.

• True
• False

Management of a firm's liquidity involves management of the firm's investment in non-current and current assts and the financing of these assets.

• True
• False

The Hedging principle involves matching the cash flow from an asset with the cash flow requirements of the financing used

• True
• False

Examples of permanent sources of financing are common equity, non-current liability and preferred stock.

• True
• False

The conservative approach to working capital financing occurs when the firm uses long-term capital to finance all permanent assets and some temporary assets

• True
• False