Working Capital Short Quiz

1. What is the main goal of working capital management?

• To reduce employee costs

• To reduce employee costs

• To ensure a company can meet its short-term obligations

• To increase marketing expenses

Which of the following is included in current assets?

• Equipment

• Accounts receivable

• Land

• Long-term investments

Net Working Capital is calculated as:

• Total Assets - Total Liabilities

• Fixed Assets - Long-term Liabilities

• Current Assets - Current Liabilities

• Current Liabilities - Current Assets

A positive working capital means a company has more current liabilities than current assets.

• True

• False

What type of business usually needs higher working capital?

• Online blog

• Law firm

• Retail store

• Consultancy service

Which of the following does not directly affect working capital?

• Inventory levels

• Interest rates

• Credit policies

• Accounts payable

Efficient working capital management improves a company’s liquidity.

• True

• False

A firm delays payments to suppliers to manage working capital. This practice affects:

• Accounts receivable

• Inventory

• Accounts payable

• Cash reserves

Which of the following is a risk of poor working capital management?

• Too much cash on hand

• Inability to meet short-term debts

• Low long-term investment

• High employee morale

A company with too much inventory may suffer from:

• Better cash flow

• High storage costs

• Low working capital

• Reduced liabilities