Top 150+ Solved Working Capital Management MCQ Questions Answer

From 91 to 105 of 143

Q. Credit Policy of a firm should involve a trade-off between increased

a. sales and increased profit

b. profit and increased costs of receivables,

c. sales and cost of goods sold,

d. none of the above.

  • b. profit and increased costs of receivables,

Q. Out of the following, what is not true in respect of factoring?

a. continuous arrangement between factor and seller,

b. sale of receivables to the factor,

c. factor provides cost free finance to seller

d. none of the above.

  • c. factor provides cost free finance to seller

Q. Payment to creditors is a manifestation of cash held for:

a. transactionery motive,

b. precautionary motive,

c. speculative motive,

d. all of the above.

  • a. transactionery motive,

Q. If the closing balance of receivables is less than the opening balance for amonth then which one is true out of

a. collections>current purchases,

b. collections>current sales,

c. collections<current purchases,

d. collections < current sales.

  • b. collections>current sales,

Q. If the average balance of debtors has increased, which of the following mightnot show a change in general?

a. total sales,

b. average payables

c. current ratio

d. bad debt loss.

  • b. average payables

Q. Securitization is related to conversion of

a. receivables,

b. stock,

c. investments,

d. creditors.

  • a. receivables,

Q. 80% of sales of 10,00,000 of a firm are on credit. It has a ReceivableTurnover of 8. What is the Average collection period (360 days a year) and Average Debtors of the firm?

a. 45 days and 1,00,000,

b. 360 days and 1,00,000,

c. 45 days and 8,00,000

d. 360 days and 1,25,000.

  • a. 45 days and 1,00,000,

Q. In response to market expectations, the credit pence r j been increased from 45days to 60 days. This would result in

a. decrease in sales,

b. decrease in debtors,

c. increase in bad debts,

d. increase in average collection perio

  • d. increase in average collection period.

Q. If a company sells its receivable to another party to raise funds, it is known as

a. securitization,

b. factoring,

c. pledging

d. none of the above.

  • b. factoring,

Q. Cash Discount term 3/15, net 40 means

a. 3% discount if payment in 15 days, otherwise full payment in 40 days,

b. 15% discount if payment in 3 days, otherwise full payment 40 days,

c. 3% interest if payment made in 40 days and 15%,interest thereafter,

d. none of the above.

  • a. 3% discount if payment in 15 days, otherwise full payment in 40 days,

Q. If cash discount is offered to customers, then which of the following wouldincrease?

a. sales

b. debtors,

c. debt collection period,

d. all of the above

  • a. sales

Q. Receivables Management deals with

a. receipts of raw materials,

b. debtors collection,

c. creditors management,

d. inventory management

  • b. debtors collection,

Q. Which of the following is related to Receivables Management?

a. cash budget,

b. economic order quantity,

c. ageing schedule,

d. all of the above.

  • c. ageing schedule,

Q. EOQ is the quantity that minimizes

a. total ordering cost,

b. total inventory cost,

c. total interest cost,

d. safety stock level.

  • a. total ordering cost,
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