WorksheetsCash Budget and Working Capital Management Quiz
Total questions: 25
Worksheet time: 15mins
A company expects cash sales of ₱150,000 in March and credit sales of ₱250,000. 60% of credit sales are collected in the same month and 40% in the next month. How much is the cash collection in March
₱250,000
₱350,000
₱300,000
₱150,000
The main purpose of a cash budget is to:
Maximize sales revenue
Monitor net income performance
Ensure liquidity and proper cash planning
Record actual cash inflows and outflows
If a company delays payment of suppliers to the following month, this will:
Increase current cash balance
Decrease cash inflows
Increase cash outflows
Reduce sales revenue
Which of the following is NOT part of a cash budget?
Cash inflows from sales
Depreciation expense
Cash outflows for expenses
Beginning cash balance
A firm has a beginning cash balance of ₱50,000. Expected collections are ₱200,000, and disbursements total ₱180,000. The minimum cash balance required is ₱100,000. How much is the excess or deficiency?
₱70,000 excess
₱30,000 deficiency
₱120,000 excess
₱20,000 deficiency
XYZ Corp’s credit policy allows 70% collection in the month of sale, 25% in the next month, and 5% uncollectible. If January sales were ₱200,000, what is the February cash collection from January sales?
₱140,000
₱50,000
₱60,000
₱40,000
If a company underestimates expenses in the cash budget, the most likely result is:
Excess Cash
Cash Shortage
Higher Profit
Increased equity
A cash budget is most useful for:
Identifying non-cash expenses
Recording past financial performance
Preparing the income statement
Planning for seasonal fluctuations in cash needs
Working capital is calculated as:
Current Assets – Current Liabilities
Total Assets – Total Liabilities
Cash + Accounts Receivable – Accounts Payable
Current Assets ÷ Current Liabilities
If a company’s current ratio is less than 1, it means:
The firm has more current assets than current liabilities
The firm may struggle to meet short-term The firm may struggle to meet short-term obligations
The firm is highly liquid
The firm is debt-free
Which of the following transactions increases working capital?
Purchase of inventory on credit
Collection of accounts receivable
Payment of accounts payable
Borrowing short-term loan
ABC Corp has Current Assets of ₱500,000 and Current Liabilities of ₱300,000. What is the Working Capital Ratio (Current Ratio)?
0.6
1.5
2.0
3.0
A company has too much working capital tied up in inventory. Which action would improve efficiency?
Extending customer credit terms
Reducing inventory levels through better stock management
Increasing purchases of raw materials
Paying liabilities earlier
The Cash Conversion Cycle (CCC) is defined as:
Days Inventory Outstanding + Days Payable Outstanding
Days Payable Outstanding – Days Receivable Outstanding
Inventory Turnover + Current Ratio
Days Sales Outstanding + Days Inventory Outstanding – Days Payable Outstanding
If a company shortens its cash conversion cycle, it will:
Need more external financing
Decrease liquidity
Free up cash faster
Increase borrowing costs
A negative working capital means:
Current liabilities exceed current assets
Assets are greater than liabilities
Liquidity is strong
Inventory turnover is high
Which of the following is a long-term solution to working capital problems?
Delaying supplier payments
Increasing bank overdraft
Raising additional equity
Reducing daily expenses
The Budgeted Income Statement is prepared primarily to:
Record actual profit
Estimate future profitability
Show cash inflows and outflows
Present financial position
Which is the correct order in preparing a Budgeted Income Statement?
Sales → Expenses → Net Income
Sales → COGS → Gross Profit → Operating Expenses → Net Income
Expenses → Sales → Net Income
Cash → Net Income → Expenses
If budgeted sales are ₱400,000, cost of goods sold is 60% of sales, and operating expenses are ₱100,000, the budgeted net income is:
₱60,000
₱40,000
₱80,000
₱50,000
Which of the following is NOT part of a budgeted income statement?
Gross Profit
Net Income
Interest Expense
Accounts Payable
A company expects Sales = ₱500,000, COGS = ₱300,000, Operating Expenses = ₱120,000, and Interest Expense = ₱20,000. What is the Net Income?
₱60,000
₱80,000
₱100,000
₱120,000
A budgeted income statement is useful for:
Forecasting profitability and guiding management decisions
Monitoring cash balances
Showing changes in assets and liabilities
Recording actual revenues and expenses
If budgeted gross profit margin decreases from 40% to 30%, this means:
Operating expenses have increased
Sales have decreased
COGS has increased relative to sales
Net income has improved
A company projects Sales = ₱1,000,000, COGS = ₱650,000, and Operating Expenses = ₱250,000. What is the budgeted net income?
₱100,000
₱150,000
₱200,000
₱250,000
