FM C Working capital management

Written by Mahnoor Sheikh (ACCA)

اے سی سی اے · مالیاتی انتظام · 8 سوالات

نام: ____________________   تاریخ: ____________

1. Inventory is held for 60 days, receivables are collected in 45 days and payables are paid in 40 days. What is the cash operating cycle?

   • A 25 days
   • B 145 days
   • C 65 days
   • D 85 days

2. Which of these is a sign of overtrading?

   • A Very high liquidity ratios
   • B A fall in payables
   • C Falling revenue and high cash
   • D Rapid growth in revenue with falling liquidity and a rising overdraft

3. A business takes a conservative approach to financing working capital. What does it do?

   • A Uses mainly short-term finance
   • B Pays no interest
   • C Uses more long-term finance, which is safer but costlier
   • D Uses no finance

4. Annual cash needs are $1,000,000, the cost of each transfer is $50 and the interest rate is 5 percent. What is the Baumol transfer amount, to the nearest dollar?

   • A $10,000
   • B $44,721
   • C $100,000
   • D $20,000

5. Which model sets upper and lower limits for cash balances when cash flows vary?

   • A The CAPM
   • B The Miller-Orr model
   • C The economic order quantity model
   • D The Baumol model

6. Which of these is a way of speeding up the collection of receivables?

   • A Not following up overdue accounts
   • B Giving longer credit terms
   • C Offering an early settlement discount
   • D Removing credit checks

7. A discount of 2 percent is offered for paying 30 days earlier. Which formula gives the annual cost of not taking it?

   • A 2/100 x 30
   • B (1 + 2/98) to the power of 365/30, less 1
   • C (1 + 2/100) to the power of 30/365
   • D 2 x 365/30

8. Factoring is:

   • A Buying inventory
   • B Selling receivables to a finance company or handing it the collection of debts
   • C Paying suppliers early
   • D Issuing shares