Top 150+ Solved Working Capital Management MCQ Questions Answer
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.
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.
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.
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.
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.
Q. Securitization is related to conversion of
a. receivables,
b. stock,
c. investments,
d. creditors.
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.
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
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.
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.
Q. If the sales of the firm are . 60,00,000 and the average debtors are . 15,00,000 then the receivables turnover is
a. 4 times,
b. 25%,
c. 400%,
d. 0.25 times
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
Q. Receivables Management deals with
a. receipts of raw materials,
b. debtors collection,
c. creditors management,
d. inventory management
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.
Q. EOQ is the quantity that minimizes
a. total ordering cost,
b. total inventory cost,
c. total interest cost,
d. safety stock level.