Working Capital Management Quiz

What is the definition of working capital?

• Long-term investments

• Total liabilities

• Fixed assets

• Net current assets

Which of the following is NOT a component of working capital?

• Cash

• Short-term investments

• Long-term debt

• Inventory

What is the primary objective of working capital management?

• Ensure sufficient working capital

• Maximize long-term investments

• Minimize operational costs

• Increase fixed assets

What does surplus cash typically get used for?

• Increasing inventory

• Paying off long-term debt

• Long-term investments

• Short-term investments

Which of the following is a source of financing working capital?

• Bank overdrafts

• Long-term loans

• Real estate sales

• Equity financing

What is the risk of excessive investment in working capital?

• Tied-up funds

• Higher profitability

• Reduced operational efficiency

• Increased liquidity

What does a long cash operating cycle indicate?

• Higher liquidity

• Larger investment in working capital

• Lower operational costs

• Faster inventory turnover

Which policy utilizes short-term financing for fluctuating assets?

• Conservative funding policy

• Aggressive funding policy

• Balanced funding policy

• Moderate funding policy

What is the formula for calculating the current ratio?

• Total liabilities / Total assets

• Total assets / Total liabilities

• Current liabilities / Current assets

• Current assets / Current liabilities

What does a quick ratio exclude from its calculation?

• Current liabilities

• Cash

• Current assets

• Inventory