Worksheets3-WORKING CAPITAL&ASSETS MANAGEMENT
Total questions: 18
Worksheet time: 9mins
Firms typically would prefer a positive working capital versus a negative working capital.
TRUE
FALSE
Working capital management involves the management of all of a firm's assets and liabilities.
TRUE
FALSE
The image can be best explained as cycle in
Liquidity cycle
Cash flow cycle
Working capital cycle
What is the meaning of the term 2/10 net 30?
If the invoice is paid within 10 days, a 2% discount can be taken; otherwise the full invoice is due in 30 days.
If the invoice is paid within 10 days, a 2% discount can be taken. If the invoice is paid between 11 and 29 days, a 1% discount can be taken. After 30 days, the full invoice is due.
If the invoice is paid within 2 days, a 10% discount can be taken; otherwise a 2% discount can be taken if the invoice is paid in 30 days.
If the invoice is paid within 2 days, a 10% discount can be taken; otherwise the full invoice is due in 30 days.
Which of the following are the "5-C's of Credit"?
Cash, Capacity, Capital, Compensation, Collectability
Character, Capacity, Compensation, Collateral, Conditions
Character, Cash, Credit, Collateral, Collectability
Character, Capacity, Capital, Collateral, Conditions
In calculating the economic order level, the total inventory cost consist of_______
total ordering cost
total storage cost
total ordering cost + total storage cost
total ordering cost - total storage cost
What of the following best describes just-in-time inventory management?
Inventory is maintained as a buffer to meet uncertainties in demand, supply, and movements of goods.
A firm acquires inventory precisely when needed for the production, so that its inventory balance is always at, or close to, zero.
A firm minimizes the time lags present in the supply chain by maintaining a certain amount of inventory to use in these lag times.
Anyone who has bought from a business without payment (buying on credit) is known as a _____________.
Creditor
Debtor
Inventory can be in form of
raw material
work in progress
finished goods
all the answers
"Permanent asset investments are financed with permanent sources, and temporary asset investments are financed with temporary sources".
These refer to the working capital policy ......
maturity matching approach
conservative approach
low risk approach
headache approach
Which of the following would be consistent with a more aggressive approach to financing working capital?
Financing short-term needs with short-term funds.
Financing some long-term needs with short-term funds.
Financing permanent inventory buildup with long-term debt.
Financing seasonal needs with short-term funds.
Permanent working capital
includes fixed and current assets.
varies with seasonal needs.
is the amount of current assets required to meet a firm's long-term minimum needs.
is the net working capital of the company.
The ABC inventory system, the C category represent
small number of usage but require high amount of investment with closely monitored/ control.
moderate value of usage and moderate investment and moderate control.
large number of usage but with small amount of investment and minimum control
Which of the following consider as near to cash assets
account receivables
marketable securities
inventory
debtors
Some consideration for investor to buy the marketable securities EXCEPT
Financial risk
Rate of return
Interest rate risk
Cost of capital
Speculative motives in holding cash explains ....
cash in reserve for random, unforeseen fluctuations in cashflow
cash associated with payments and collections; for meet the day-to-day operations.
cash that enable the firm to take advantage of any bargain purchases that might arise
A credit policy is a set of terms that lays out company policy on credit term such as on how will issue credit to its clients, collect unpaid debts, credit limit and risk of past due payment .
TRUE
FALSE
An incentive that a seller offers to a buyer in return for paying a bill before the due date
cash discount
trade discount
credit policy
credit notes
