Working Capital Management

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.

In Current Ratio, Current Assets are compared with:

• Fixed Assets

• Current Profit

• Current Liabilities

• Equity Share Capital

Negative working Capital represents that:

• Current Liabilities > Current Assets

• Current Liabilities < Current Assets

• Both (a) and (b)

• None of the above

Sufficient working capital is needed to prevent a business from becoming insolvent.

• True

• False

Which of the following could be turned into cash the easiest or quickest?

• Raw materials

• Finished product

• Semi-finished product

• None of these

The cheapest source of finance is

• Equity Shares

• Preference Shares

• Retained Earnings

• Debentures