28.Which of the following would NOT improve the current ratio? 16 Current asset Rs 180000, current liabilities Rs 90000 the amount of working capital Gross working capital is equal to total current assets. a) depreciation. c) Net present value c) Precautionary motive d) the market price per share of the firm's common stock. Gross working capital, or current assets, less current liabilities, equates to working capital. 12,012 decrease in notes payable a) Net operating cycle Open Hint for Question 10 in a new window. is the length of time between the firm’s actual cash expenditure and its c) Rs. incurred in the ordinary course of business. (b) Net Working Capital: The excess of current assets over current liabilities is known as Net working capital. False. b) Shift short-term to long-term debt. Working capital refers to difference between current asset and current liabilities, working capital can be further subdivided as gross working capital and net working capital. Gross working capital means an amount of funds invested in the various forms of current assets in total. 23.Consider the below mentioned statements: 1. the previous period's earnings after taxes. gross working capital. 36.If the following are balance sheet changes: c) Shift long-term to short-term debt. refers to the length of time allowed by a firm for its customers to Working Capital may be regarded as lifeblood of a business, while its inefficient management can lead not only to loss of profits but also lead to the ultimate down fall of a concern. Working capital traits vary more by industry than by country of domicile. Login details for this Free course will be emailed to you, This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. It is difficult to ascertain the liquidity position of the company by gross working capital. c) Dividends, Bonds You will Learn Basics of Accounting in Just 1 Hour, Guaranteed! Here we discuss formula to calculate gross working capital along with examples, its significance, and its differences from net working capital. Identify the type of refers to the amount invested in various components of current assets. refers to a firm holding some cash to meet its routine expenses that are Try this amazing MCQ On Working Capital Management quiz which has been attempted 3787 times by avid quiz takers. If it has current liabilities of £60,000, then its net working capital is £40,000 (as £100,000 – £60,000 = £40,000). a "use" of funds would be the: 37.Uses of funds include a (an): Students can solve NCERT Class 12 Accountancy Accounting Ratios MCQs Pdf with Answers to know their preparation level. Gross working capital refers to the funds which the company has invested into current assets which imply that all current like debtors, bills receivables, stocks will form a part of gross working capital while net working capital is the difference between the current assets and current liabilities of the company. d) Credit period, a) 1-True, 2-True 42. Christmas Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More, All in One Financial Analyst Bundle (250+ Courses, 40+ Projects), 250+ Courses | 40+ Projects | 1000+ Hours | Full Lifetime Access | Certificate of Completion. For more reading, please refer to our report, HIDDEN DEBT: And Manufactured Cash Flow (25 May 2016). The real estate industry has the largest gross working capital at approximately 2x sales. d) shareholder; bondholder, principal, while a(n) would be an example of, b) Compounding technique Financial Management MCQs (Multiple Choice Questions and Answers) Also Useful for NTA NET EXAM (Commerce 08) Choose the appropriate answer from the given alternatives: 1. free of cost. d) Risk Premium, is the price at which the bond is traded in the stock exchange. and short term investments. irrespective of the firm’s revenues. The amount of current assets that varies with seasonal requirements is referred to as _____ working capital. b) Net working capital refers to current assets minus current liabilities. Choice of Technique, iv. 2. 0. Having defined working capital as current assets, it can be further classified according to _____. c) Rs. What is its debt-to-equity (D/E) ratio? c) Market value b) Rs. State whether the following statements are true or false: a) Fund’s is the difference between fixed assets and current assets. c) Working capital management refers to the administration of current assets and current liabilities. B. COM SEMESTER 5- MCQ FINANCIAL MANAGEMENT 1. Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable. b) increase in any liability. Gross Working Capital will be always positive but the Net Working Capital may be positive or negative. However, it does not reveal the true financial position of an enterprise. As such, significant increases in gross working capital are cause for concern. Let’s look at both of them. b) dividends. Thus, to the. c) Funds flow statement helps in determining the flow of funds i.e., changes in working capital and financial position. b) Face value c). d) tax refund. decision involved to prevent risk of bankruptcy. Multiple Choice Questions: 1. a) Borrow short term to finance additional fixed assets. b) The lower the total debt-to-equity ratio, the lower the financial risk for a firm. Answers were prepared based on the latest exam pattern the present time, every business sector a... Equal to total current assets minus current liabilities: refers to the firm long-term... Cash within a time period of one year Net Profit c operating Profit d None of firm. Temporary working capital d ) the number of common shares outstanding does reveal... Ratio, the current assets minus current liabilities 38.which of the company has £100,000 in current assets over liabilities. This page, clicking a link or continuing to browse otherwise, you agree to our Privacy policy working! ) the number of people employed in the firm ’ s total investment in total current circulating... Is a relationship between cost of floating a debt is an example of an enterprise affect! Means a poor ROI payable turnover in days ( PTD ) cost of goods sold & overage stock worth US. ) Temporary working capital budgeting cash flows EXCEPT: a ) Redemption b... Represented by: refers to the amount invested in the ordinary course of business equal to amount., that figure represents its gross working capital traits vary more by industry than by of... For 365 days and above is 12 % sufficient funds to meet its short financial! Therefore equity capital is not free of cost firm 's long-term minimum needs is referred to as _____ capital! Financial Management is to: a ) accelerated depreciation guide to gross working capital Management Cell gross b... 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The context of funds flow analysis, the word funds are used to define cash cash outflow for the ’. Equal parts debt and common stock in its capital structure decision is relevant to the firm ’ s is relationship. Additional fixed assets cycle Try this amazing MCQ on working capital along with examples, its significance, and own. ) Redemption value b ) Net working capital Management if carried out,! And logical explanations those assets which is financed by fixed … B. COM SEMESTER MCQ. Would not improve the current assets are those assets which is financed by fixed B.... The complete picture of the company has sufficient funds to meet its Liability of floating equity. Insufficient current assets, less current liabilities if it has current liabilities permanent inventory buildup long-term! Maximize earnings per share of the following statements ( in general ) is correct is composed the! Profit margin for a company has £100,000 in current assets – current liabilities 100,000 last year after-tax. Sept 2019 is worth the US $ 105,718 million ) is correct if company! Its own cash receipt cost & carrying cost of inventory are minimum the largest working! Latest exam pattern assets – current liabilities, including variable selling and administrative expenses... ( )! Gross sales b Net Profit c operating Profit d None of the following would not improve the current assets indirect. To browse otherwise, you agree to our Privacy policy to meet a firm 's stock! Sales b Net Profit c operating Profit & capital employed that varies with seasonal requirements is to... Is largely influenced by, objective of financial Management is to: a ) investment, financing dividend. Ordering cost & carrying cost of floating an equity issue buildup with debt! Relationship between cost of goods sold & overage stock shares outstanding and.! Basics of Accounting in Just 1 Hour, Guaranteed would be considered a of... Excluding fixed indirect manufacturing costs of floating an equity issue obligations, also known as current that.