Top 150+ Solved Working Capital Management MCQ Questions Answer
Q. The tools of treasury management does not include:
a. foreign exchange management
b. cash management
c. receivable management
d. risk management
Q. Under which type of bank borrowing can a borrower obtain credit from abank against its bills?
a. letter of credit
b. cash
c. purchase or discounting of bills
d. working capital loan
Q. The factors that affect dividend policy are:
a. tax consideration
b. privatisation
c. foreign investment
d. working cash flow
Q. To financial analysts, "working capital" means the same thing as __________.
a. total assets
b. fixed assets
c. current assets
d. current assets minus current liabilities.
Q. Which of the following would be consistent with an aggressive approach tofinancing working capital?
a. financing short-term needs with short-term funds.
b. financing permanent inventory buildup with long-term debt.
c. financing seasonal needs with short-term funds.
d. financing some long-term needs with short-term funds.
Q. Which of the following would be consistent with a conservative approach tofinancing working capital?
a. financing short-term needs with short-term funds.
b. financing short-term needs with long-term debt.
c. financing seasonal needs with short-term funds.
d. financing some long-term needs with short-term funds.
Q. -Which of the following would be consistent with a hedging (maturity matching)approach to financing working capital?
a. financing short-term needs with short-term funds.
b. financing short-term needs with long-term debt.
c. financing seasonal needs with long-term funds.
d. financing some long-term needs with short-term funds.
Q. Which of the following statements is most correct?
a. for small companies, long-term debt is the principal source of external financing.
b. current assets of the typical manufacturing firm account for over half of its total assets.
c. strict adherence to the maturity matching approach to financing would call for all current assets to be financed solely with current liabilities.
d. similar to the capital structure management, working capital management requires the financial manager to make a decision and not address the issue again for several months
Q. The amount of current assets that varies with seasonal requirements isreferred to as __________ working capital.
a. permanent
b. net
c. temporary
d. gross
Q. Having defined working capital as current assets, it can be further classifiedaccording to __________.
a. financing method and time
b. rate of return and financing method
c. time and rate of return
d. components and time
Q. Your firm has a philosophy that is analogous to the hedging (maturitymatching) approach. Which of the following is the most appropriate form for financing a new capital investment in plant and equipment?
a. trade credit.
b. 6-month bank notes.
c. accounts payable.
d. common stock equity.
Q. Your firm has a philosophy that is analogous to the hedging (maturitymatching) approach. Which of the following is the most appropriate non- spontaneous form for financing the excess seasonal current asset needs?
a. trade credit.
b. 6-month bank notes.
c. accounts payable.
d. common stock equity.
Q. -Under a conservative financing policy a firm would use long-term financing tofinance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes total assets to fall below the total longterm financing?
a. use the excess funds to pay down long-term debt.
b. invest the excess long-term financing in marketable securities.
c. use the excess funds to repurchase common stock.
d. purchase additional plant and equipment.
Q. -Which of the following statements is correct for a conservative financing policyfor a firm relative to a former aggressive policy?
a. the firm uses long-term financing to finance all fixed and current assets.
b. the firm will see an increase in its expected profits.
c. the firm will see an increase in its risk profile.
d. the firm will increase its dividends per share (dps) this perio
Q. Which of the following statements is correct for an aggressive financing policyfor a firm relative to a former conservative policy?
a. the firm will use long-term financing to finance all fixed and current assets.
b. the firm will see an increase in its expected profits.
c. the firm will see a decline in its risk profile.
d. the firm will need to issue additional common stock this period to finance the assets.