Financial Management and Working Capital Quiz
Test your knowledge on working capital management with questions on liquidity, ratios, financing, and cash flow.
#1
What is working capital?
The total assets of a company
The difference between current assets and current liabilities
The long-term investments of a company
The total liabilities of a company
#2
Which of the following is not a component of working capital?
Cash
Accounts Receivable
Inventory
Property, Plant, and Equipment
#3
What is the primary goal of working capital management?
Maximizing long-term profits
Minimizing short-term liabilities
Maximizing the value of the firm
Maintaining liquidity while minimizing costs
#4
Which of the following is a source of short-term financing?
Issuing common stock
Selling long-term bonds
Accounts payable
Issuing preferred stock
#5
What does the Cash Conversion Cycle indicate about a company?
The efficiency of its inventory management
The effectiveness of its marketing strategies
The profitability of its long-term investments
The speed at which it collects accounts receivable
#6
What does the term 'liquidity' refer to in financial management?
The ability of a firm to meet its short-term obligations
The ability of a firm to generate profits
The ability of a firm to acquire long-term assets
The ability of a firm to raise capital
#7
Which ratio measures a company's ability to pay off its short-term liabilities with its current assets?
Debt-to-Equity Ratio
Current Ratio
Quick Ratio
Inventory Turnover Ratio
#8
What is the cash conversion cycle?
The time it takes for a company to convert inventory into cash
The time it takes for a company to convert accounts receivable into cash
The time it takes for a company to convert cash into accounts payable
The time it takes for a company to convert cash back into inventory
#9
Which of the following is true about aggressive working capital management?
It involves maintaining high levels of cash and inventory
It aims to minimize the cash conversion cycle
It is conservative in nature
It results in lower liquidity but higher profitability
#10
What is the formula for the Operating Cycle?
Days Inventory Outstanding + Days Accounts Payable Outstanding
Days Sales Outstanding + Days Accounts Receivable Outstanding
Days Accounts Payable Outstanding - Days Sales Outstanding
Days Accounts Receivable Outstanding - Days Inventory Outstanding
#11
What is the formula for calculating the Quick Ratio?
(Current Assets - Inventory) / Current Liabilities
Current Assets / Current Liabilities
(Cash + Marketable Securities + Accounts Receivable) / Current Liabilities
(Total Liabilities - Intangible Assets) / Current Assets
#12
What is the formula for calculating the Cash Conversion Cycle?
(Days Inventory Outstanding + Days Sales Outstanding) - Days Payable Outstanding
(Days Payable Outstanding - Days Sales Outstanding) + Days Inventory Outstanding
(Days Inventory Outstanding - Days Payable Outstanding) + Days Sales Outstanding
(Days Sales Outstanding + Days Payable Outstanding) - Days Inventory Outstanding
#13
What is the purpose of the Cash Budget in working capital management?
To forecast sales revenue
To project cash inflows and outflows
To analyze profitability ratios
To evaluate investment opportunities
#14
What is the primary goal of cash flow management in working capital?
To minimize the cash conversion cycle
To maximize short-term profits
To ensure sufficient liquidity
To increase inventory turnover
#15
What is the primary objective of managing working capital efficiently?
To increase long-term investments
To improve the company's credit rating
To maximize shareholder wealth
To ensure the company's survival and growth
Sign In to view more questions.
Quiz Questions with Answers
Forget wasting time on incorrect answers. We deliver the straight-up correct options, along with clear explanations that solidify your understanding.
Popular Quizzes in Finance
Report