Working Capital Management MCQ Multiple Choice Questions - Page 3 for Practice

Correct Answer is: Financing a portion of permanent working capital with short-term debt and a portion with long-term debt

Correct Answer is: Aggressive

Correct Answer is: Conservative

Correct Answer is: The effective interest rate that a company pays for not taking the discount

Correct Answer is: [(Discount % / (100% - Discount %)) x (365 days / (Credit period - Discount period))]

Correct Answer is: Approximately 36.73%

Correct Answer is: The minimum level of inventory that a company must maintain to avoid stockouts

Correct Answer is: Loss of profitability

Correct Answer is: All of the above

Correct Answer is: A system that aims to minimize inventory levels by ordering and receiving goods only as needed

Correct Answer is: Reduced inventory costs, improved quality, increased productivity

Correct Answer is: Increased risk of stockouts

Correct Answer is: All of the above

Correct Answer is: All of the above

Correct Answer is: All of the above

Correct Answer is: All of the above

Correct Answer is: The minimum level of working capital that a company needs to operate

Correct Answer is: The working capital that fluctuates with the level of sales

Correct Answer is: Inability to meet short-term obligations

Correct Answer is: Matching revenues with the expenses incurred to generate those revenues

Correct Answer is: It guides the financing of permanent working capital with long-term sources of funds

Correct Answer is: Current assets / Current liabilities

Correct Answer is: A company's ability to meet its short-term obligations

Correct Answer is: (Current assets - Inventory) / Current liabilities

Correct Answer is: A company's ability to meet its short-term obligations without relying on the sale of inventory

Correct Answer is: Cost of goods sold / Average inventory

Correct Answer is: How quickly a company sells its inventory

Correct Answer is: 365 days / Inventory turnover ratio

Correct Answer is: The average number of days it takes a company to sell its inventory

Correct Answer is: Cash