Top 150+ Solved Working Capital Management MCQ Questions Answer

From 31 to 45 of 143

Q. How can a firm provide a margin of safety if it cannot borrow on short notice tomeet its needs?

a. maintain a low level of current assets (especially cash and marketable securities).

b. shorten the maturity schedule of financing.

c. increasing the level of fixed assets (especially plant and equipment).

d. lengthening the maturity schedule of financing.

  • d. lengthening the maturity schedule of financing.

Q. Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to __________.

a. meet its cash obligations as they occur and take advantage of prompt payment discounts

b. support the proper level of sales and take prompt payment discounts

c. maintain current and acid-test ratios at or above industry norms

d. meet its cash obligations as they occur and support the proper level of sales

  • d. meet its cash obligations as they occur and support the proper level of sales

Q. If a company moves from a "conservative" working capital policy to an"aggressive" policy, it should expect __________.

a. liquidity to decrease, whereas expected profitability would increase

b. expected profitability to increase, whereas risk would decrease

c. liquidity would increase, whereas risk would also increase

d. risk and profitability to decrease

  • a. liquidity to decrease, whereas expected profitability would increase

Q. To financial analysts, "net working capital" means the same thing as __________.

a. total assets

b. fixed assets

c. current assets

d. current assets minus current liabilities.

  • d. current assets minus current liabilities.

Q. Working Capital Turnover measures the relationship of Working Capital with:

a. fixed assets,

b. sales,

c. purchases,

d. stock.

  • a. fixed assets,

Q. Dividend Payout Ratio is:

a. pat capital,

b. dps ÷ eps,

c. pref. dividend ÷ pat,

d. pref. dividend ÷ equity dividen

  • b. dps ÷ eps,

Q. Inventory Turnover measures the relationship of inventory with:

a. average sales,

b. cost of goods sold,

c. total purchases,

d. total assets.

  • b. cost of goods sold,

Q. The term 'EVA' is used for:

a. extra value analysis,

b. economic value added,

c. expected value analysis,

d. engineering value analysis.

  • b. economic value added,

Q. In Current Ratio, Current Assets are compared with:

a. current profit,

b. current liabilities,

c. fixed assets,

d. equity share capital.

  • b. current liabilities,

Q. There is deterioration in the management of working capital of XYZ Ltd. Whatdoes it refer to?

a. that the capital employed has reduced,

b. that the profitability has gone up,

c. that debtors collection period has increased,

d. that sales has decrease

  • c. that debtors collection period has increased,

Q. Debt to Total Assets of a firm is .2. The Debt to Equity boo would be:

a. 0.80,

b. 0.25,

c. 1.00,

d. 0.75

  • b. 0.25,

Q. In Inventory Turnover calculation, what is taken in the numerator?

a. sales,

b. cost of goods sold,

c. opening stock,

d. closing stock.

  • b. cost of goods sold,

Q. Walter’s Model suggests that a firm can always increase i.e. of the share by

a. increasing dividend ,

b. decreasing dividend,

c. constant dividend,

d. none of the above

  • d. none of the above

Q. ‘Bird in hand' argument is given by

a. walker's model,

b. gordon's model,

c. mm mode,

d. residuals theory

  • b. gordon's model,

Q. Residuals Theory argues that dividend is a

a. relevant decision ,

b. active decision,

c. passive decision,

d. irrelevant decision

  • c. passive decision,
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