WorksheetsWorking Capital Management
Total questions: 15
Worksheet time: 4hrs 45mins
To financial analysts, “Working Capital” means the same as:
Current Assets – Total Liabilities
Total Assets – Current Liabilities
Total Assets – Total Liabilities
Current Assets – Current Liabilities
What are the aspects of Working Capital Management?
Receivable management
Inventory management
Cash management
All of the above
Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to ___________.
Support appropriate level of Sales and take prompt payment discounts.
Meet its cash obligations as they occur and take advantage of prompt payment discounts.
Meet its cash obligations as they occur and support appropriate level of sales.
Maintain current and acid-test ratios at or above industry norms.
Current liabilities are debts that have to be paid ________
in the next 12 months
in the next 5 years or more
in order to buy a current asset
to buy more working capital
The working capital situation of a firm can be improved by obtaining ______________ forms of _____________ term finance.
external, short
internal, long
Net working capital is the difference between current assets and current liabilities.
Positive net working capital shows that the company is solvent.
The goal of working capital management is to ensure adequate cash flow for operations.
A company with more current assets has a low level of liquidity and therefore is low risk.
A company that use more current liabilities will have higher level of liquidity as well as its profitability.
SMO Bookstore is trying to determine the optimal order quantity for a popular book. The store feels that the book will sell approximately 17, 000 copies in a year. The carrying cost per copy is RM2 and it costs RM60 to order more books. Determine the optimal EOQ level.
1010 units
3144 units
2010 units
3104
Kinokuniya Bookstore will sell approximately 17, 000 copies of books in a year. The company maintains 2,200 units as the desired safety stock and it normally take 20 days to receive the order made. If the EOQ of the bookstore is 1010 units, calculate the reorder point. Assume 360 days in one year.
3144 units
6420 units
5410 units
2020 units
Acson Electronics purchases 150, 000 units of one component of its air conditioner per year. The selling price of the cooler fan is RM1500 per unit. The company analyzed its inventory costs and has found that the component has an order cost of RM300 per order and carrying cost is 10% of its selling price. Determine the optimal EOQ level.
10,417 units
775 units
839 units
1700 units
Calculate the inventory cost of a firm if its usage is 150,000 units, EOQ is 775 units, ordering cost is RM300, selling price is RM1500 and carrying cost is 10% of its selling price.
RM 58,064.52
RM 58,125
RM 116,189.52
RM 16,420
Customer gets 2% discount if paid within 10 days from the invoice date. If not, customer has to pay full amount at the end of 30 days. Which the following credit term is correct for the above statement?
10/2, net 30
2/30, net 10
2/10, net 30
10/30, net 2
