Fixed and working capital

Capital Budgeting affects _____and _______of a business.

• liquidity, profitability

• Solvency, liquidity

• profitability, solvency

Which of the following are current assets?

• bills receivable

• debtors

• advance received from customers

• cash in hand/at bank

Which of the following statements is not true with regard to use of fixed capital?

• It affects the long term growth of the business

• The business risk involved is low

• Large amount of funds are involved

• The investment decisions are irreversible

Which among the following is not a factor affecting fixed capital requirements?

• Diversification

• Business cycle

• nature of business

• Financial alternatives

_____represents investment in current assets required for day-to-day operations of the business.

• Long-term capital

• Working capital

• Capital Budgeting

• Medium-term capital

Net working capital is the excess of _______ over _______

• fixed assets, current liabilities

• current liabilities, current assets

• Fixed assets, current assets

• current assets, current liabilities

______ is the time span between the receipt of raw material and their conversion into finished goods.

• working capital

• operating cycle

• payback period

• production cycle

Purchasing a new machine to replace an existing one is an example of

• Working capital

• Financing decision

• Dividend decision

• Capital budgeting decision

Under which of the following circumstances the fixed capital requirement of a business is not likely to be high?

• When the raw material is not easily available

• Capital intensive techniques of production are used

• The growth prospects of a company a high

• When the financial alternatives are easily available

The working capital requirement of a business is not likely to be high when?

• The nature of business is trading

• It is difficult to procure raw material

• Scale of operation of business is small

• The rate of inflation is low