Assessment of Working Capital

What is the funding required by a business to carry the current assets required for efficient operation?

• Term liabilities

• Debt

• Equity

• Working capital

What does a low level of working capital generally indicate?

• Inefficient use of working capital management

• Efficient use of working capital management

• Unbalanced operations

• High risk of price fluctuation

What is the formula to calculate the length of the Working Capital Cycle for non-manufacturing businesses?

• WCC (months) = (TCA - OCL) x 25%

• WCC (months) = (TCA/Net Sales) x 100

• WCC (months) = (TCA - OCL) x 25%

• WCC (months) = (CA/Net Sales) x 100

Which of the following is a long-term source of financing for working capital?

• Trade Payable/Creditors

• Bank borrowings

• Equity

• Accrued expenses

What is the purpose of the Cash Budget method for assessing working capital finance?

• To assess the projected levels of assets and liabilities

• To assess the liquidity of the borrower

• To assess the peak deficit in cash flows

• To assess the output value of net sales

Under the Turnover Method, what percentage of the projected annual turnover is used to Calculate Working Capital Gap?

• 15%

• 20%

• 25%

• 10%

Under the Turnover Method, what percentage of the projected annual turnover is used to compute the working capital credit limit(MFBF)?

• 15%

• 20%

• 25%

• 10%

Under the Turnover Method, what percentage of the projected annual turnover is used to compute the working capital credit limit(MFBF), if sales through digital mode is more than 25%?

• 15% in Non Digital Sales & 20 % Digital Sales

• 20% in Non Digital Sales & 25 % Digital Sales

• 25% Non Digital Sales & 30 % Digital Sales

• 31.25% in Non Digital Sales & 37.50% Digital Sales

In 1st Method of Lending, what is minimum margin required for Net Working Capital

• 20% of WCG

• 20% of TCA

• 25% of WCG

• 25% of TCA

In 2nd Method of Lending, what is minimum margin required for Net Working Capital

• 20% of WCG

• 25% of WCG

• 20% of TCA

• 25% of TCA