Working Capital
1. Working Capital Management mainly ensures ______
(Long-term investment planning or
Smooth day-to-day operations)
Smooth day-to-day operations
The Operating Cycle measures the time taken to convert __________ into cash.
(inventory / fixed assets)
inventory
1. A shorter Cash Conversion Cycle indicates better ____.
(liquidity / losses)
Liquidity
2. Net Working Capital is calculated as ______
( Current Assets – Current Liabilities
Or Current Assets + Current Liabilities)
Current Assets – Current Liabilities
Operating Cycle begins with the purchase of __________.
(raw materials / finished goods)
raw materials
2. The formula for CCC is
Inventory Period + Receivables Period − _________.
(Payables Period / Sales Revenue)
Payables Period
3. Gross Working Capital refers to ______
( Total Current Assets or
Total Current Liabilities)
Total Current Assets
The Operating Cycle includes the Raw Material Period, WIP Period, Finished Goods Period, and __________ Period.
(receivables / depreciation)
receivables
3. The conservative approach results in __ profitability due to higher cost of capital.
(a) Higher
(b) Lower
4. The minimum capital required for regular expenses like wages and raw materials is called_______.
( Permanent (Regular) Working Capital or
Temporary Working Capital)
Permanent (Regular) Working Capital
If the Operating Cycle increases, the company’s __________ requirement increases.
(working capital / share capital)
working capital
4. Cash is first used to purchase _____.
(raw materials / fixed assets)
Raw materials
5. Seasonal Working Capital is required to________.
Meet temporary increase in production or sales or Purchase fixed assets
Meet temporary increase in production or sales
Raw Material Holding Period is calculated as:
Average Raw Material Inventory ÷ __________.
(raw material consumption per day / total annual sales)
raw material consumption per day / total annual sales
5. If a company receives cash before paying suppliers, the CCC becomes _____.
(negative / long)
Negative