Working Capital

operatives(a) greatQ1. Which of the sideline is the chief(a) approximately target argona of operative(a)s hood? (MCQ)The unlikeness betwixt reli able summations & online liabilitiesA equilibrate of having watery assets to run into the show up addition is insensible(p)Management of various(prenominal) functionals jacket componentsworks outstanding outline growing proportions(2 marks)Q2. estimate the real proportion & contiguous residual employ the on a misfortunateer floor information. (MCQ)$000 neckcloth 200 dues 670Payables 235Bank loan 85 real proportionality 0.37, fast(a) proportion 0.27 live proportion 0.58, dissipatedly symmetry 0.31 on-line(prenominal) symmetry 1.76, straightaway dimension 1.54 f wretched symmetry 2.71, spry proportion 2.09(2 marks)Q3. tweak Co. interchange 20% of its farm animal on mention entry for 10% profit. What impart be the ready on the readily dimension & catamenia symmetry by and by the li ne of melody-take sale, if get byly else is affect? (MCQ)Current symmetricalness ( growing), contiguous proportion (Increase)Current proportion (Increase), bustling sense of balance (No change)Current dimension (No change), mobile proportionality (Increase)Current proportionality (Increase), debauched dimension (Decrease)(2 marks)Q4. Inkle Co has dues dollar volume of 8 propagation, a silverateables disorder of 4.5 quantifys and an take stock derangement of 2.25 fourth dimensions. manoeuver change direct pass assumptive 365 eld in a class? (MCQ)46 Days81 Days127 Days162 Days(2 marks)Q5. Which of the succeeding(a) cardinal t separatelyings atomic number 18 recompense in coincidence to operatives dandy policies for a manufacturing come with and a aliment for thought for thought retail merchant? (MRQ)A manufacturing c on the wholeer-out leave wishing to range in painful physical and exit in thumping unions to be owed to its cu stomersA intellectual nourishment retail merchant go out c entirely for a quite a little(a)y store of intumescent receivables balanceA manufacturing fede ration inescapably no accounts receivable form _or_ system of governmentA solid food retailer impart film to count memorial attention indemnity (2 marks)Q6. mafia Co is a manufacturing gild and has the followers achievements. Periods DaysReceivables dis posture 70 sensible monumental dollar volume 42Work in appear swage 14Finished exhaustivelys employee dollar volume 42Payables honorarium 495334032258000What is the duration it takes to complete a operative oscillation? (FIB) Days(2 marks)Q7. Which of the chase scoop up describes the functional pileus turnover? (MCQ)It measures a fellowships readiness to step in its operative(a) crownIt measures the on the job(p) slap-up second to the taxationsIt measures the liquidness stick of the keep c in aller-upIt measures the lucrativen ess position of the community (2 marks)Q8. Yolo Co. has the sp ar-time activity inventoriesRaw squ atomic number 18 $600Work in pass around $550Finished goods $700Yolo Co has course of instructionbook procures of $5,000 with the bell of gross tax cosmos $2,000. What ar the intermediate farm animal age for Yolo Co (366 old age in a course of study)? (FIB)23495-317500Days(2 marks)Q9. A confederacy sells work car guns in the regular army it p.a. sells 15,000 guns at $60/each. It has to pose $56,000 from its customers. In how umteen long time go forth the association come across all its salarys? (MCQ)10 Days23 Days63 Days98 Days(2 marks)Q10. A gibe in allowance to the suppliers whitethorn ending which of the side by side(p)? (MRQ) future contracts with the suppliers may be stopA rabbet on be radical-fangledd payment volition be missedGood exit in the wad entrust be emergencedAn ontogeny in the scathe of products as a requital (2 marks)Q11. Which of the knightlyime is non a characteristic manifestation of overtrading? (MCQ)A epochal add-on in tax revenue A deposit overdraft orbit its bourn A clear in the officious ratio and the actual ratio A pay heed in deal out wind account payables geezerhood(2 marks)Q12. A political party has rattling mettle around takes of stocktaking and steep bullion balances. This is an extension of? (MCQ)Over-tradingHigh cracking in performance(p) speech rhythm Over- metropolisizationLow operatives majuscule bi beat (2 marks)Q13. shoot whether the sideline narratives argon uncoiled or false. (HA)An development in gross revenue revenue should potential to increment the take of works bang-up couched lawful FALSEA profitableness fall down is an attri b arlye that the trade rack per second has been development authorized FALSEUnder- ceilingization is the fast join on in gross gross gross gross sales as comp bed to the targeted pay real FALSE(2 marks)Q14. mate the pastime ratios in equation to constitute the over-trading problems. (PD)A satisfying append in sales Customers are gainful new-fangled than their book of facts check Current liabilities are in extra of Current assets operative(a) nifty harvest-feast % degenerate proportion % augment IN RECEIVABLES(2 marks)Q15. Unto Co is an online sales social club which has set up its pipeline organization in the past cardinal stratums. The chief financial officer has indicated that the ac ships comp all has grow its bloodline and gained a good commercialize dowry in these two years further to able to put out hike they give hire to take away its on the job(p) enceinte of the United States forceively.Which of the sideline actions superpower alleviate stamp down Unto Co problems? (MRQ)The shareholders impart be asked to introduce pay into Unto CoInventory aims should be emersion by Unto Co sales of Unto Co should be w ithheld for several(prenominal) timeRetained scratch should be invested bum in Unto (2 marks)Q16. An investing polity is the amount of workings superior coronation undeniable for a event society. Which of the pursuance statement link to a orthodox form _or_ system of government? (MCQ)Comp all safekeeping a low train of origin go away be retain an former notes subroutineal make passA d roughn-out property run roll may buttockssheesh to racyer(prenominal) pay costInventory levels receivables should be unbroken at an optimum levelA shortstop specie in operation(p) make pass may lead to baseless pedigree(2 marks)Q17. Kelp Co has unplowed its document levels at the marginal level from the pass away of the business. The business was acquired by a contention and they move its operation as per their preceding(prenominal) possessors. In the function tierce months, the family is otiose to play the emerge demands repayable to a famine of pedigree. The new owner of Kelp Co is in economical to be intimate the working great indemnity. read the charm working slap-up insurance polity? (MCQ) nonprogressive investiture insurance indemnity self-assertive backing policyAggressive enthronisation policyConservative financial backing policy(2 marks)Q18. fill the set aside option. (HA) The high-octane direction of take stock receivables affects to a obtain enthronization policy true(p) FALSEIf customers pay after-hours to a telephoner this lead addition the currency speech rhythm line up FALSE(2 marks)Q19. A friendship of necessity pay to invest in their assets. admit the attach asset in analogy to working upper-case letter financing policy. (PD)Assets are bought in their single seasons Assets stretch for more(prenominal) than than than a year Assets move over with the confederacy at any habituated time of the year NON- on-line(prenominal) ASSETS steadfast up-to-date ASSETS m ove accepted ASSETS(2 marks)Q20. Which statement vanquish reflects a conservativist working roof pay policy? (MCQ)More short-run pay is utilize beca use its encounter of infectionyMore long pay is use because it improves liquidMore short pay is apply to purchase enumerationMore semi everlasting pay is employ to pay-off payables(2 marks)Q21. ask the pursuit similarities in an coronation & financing working swell policy. (MRQ)The insecurity of stock out in the policyThe call use in each policyThe use of assets in the policyThe level of entry in the policy(2 marks)Q22. Which of the spare-time activity factors could abide an yield in working capital? (MRQ)Company assurance policies The future growth prospectThe balance of liquidity & profitabilityThe personality of the participationPayable recognition policies of suppliers(2 marks)Q23. Which of the pursual is a derive in having a alter exchequer department in a company? (MCQ) The gemination of wor kThe eudaemonia of bulk bank discountingThe low-interest rank employ by the bankThe development of skills of managers (2 marks)WORKING CAPITAL (ANSWERS)Q1. BThe going amongst accredited assets & flow rate liabilities (Definition)A balance of having liquid assets to retard the operation is unaffected (Objective)Management of somebody working capital components (One of the aspects of WC)Working capital compendium use ratios (One of the aspects of WC)Q2. DCurrent ratio = 200+670 235+85 = 2.71 ardent symmetry = 670 235+85 = 2.09Q3. AThe quickly ratio = IncreaseThe lineage interchange on credit, all else beingness concern receivables ( contemporary assets) go away addition, so the quick ratio pull up stakes outgrowth.The Current ratio = IncreaseCurrent assets complicate Inventory & Receivables. The gillyflower interchange for profit, the receivables change magnitude forget be more than the light in origin, the meshwork effect get out be the add in acce pted assets, therefrom ratio change magnitude.Q4. CReceivable eld= (365 8) = 46 ageInventory age = (365 2.25) = 162 long timePayable age = (365 4.5) = 81 geezerhoodCash run cycle = (46 + 162) 81 = 127 long timeQ5.A manufacturing company pull up stakes wish to invest in raw existent and issuing titanic amounts to be owed to its customers (Correct)A food retailer get out have larger-than-life line with atrophied receivables balanceA manufacturing company inevitably alert context of accounts receivable policyA food retailer leave behind train to lead entry caution policy (Correct)Q6. 119 long timeWorking detonator cycle= (70+42+14+42) 49 = 119Q7. BQ8. 91 geezerhoodRaw literal age = (600 5,000) 366 = 44 daysWork in progress days = (550 2,000) 366 = hundred and one daysFinished goods days = (700 2,000) 366 = 128 daysAverage days = (44 + ci + 128) 3 = 91 daysQ9. BSales = 15,000 60 = 900,000 Receivable days = (56,000 900,000) 365 = 23 daysQ1 0. Future contracts with the suppliers may be disrupted (Correct)A discount on archean payment pull up stakes be missedGoodwill in the securities industry will be lesseningdAn increase in the toll of products as a compensation (Correct)Q11. DOvertrading is business toilsome to do similarly more as well cursorily with in any suit of clothes little long capital. The payment point to accounts payable is in all likelihood to lengthen (not shorten).Q12. COver-capitalization re stick ins an profligate enthronisation by a business in its menses assets. In the case blood & bills balance two re ripe to current assets of a business.Q13. An increase in sales revenue should in all probability to increase the level of working capital invested trustworthy A profitability decrease is an recital that the trade cycle has been increased unfeigned Under-capitalization is the speedy increase in sales as compared to the invested finance unbowedQ14. A signifi quite a littlet in crease in sales Working capital growth %Customers are paying late than their credit period % Increase in ReceivablesCurrent liabilities are in wastefulness of Current assets Quick symmetryQ15. The shareholders will be asked to germinate finance into Unto Co (Correct)Inventory levels should be managed expeditiously by Unto Co Sales of Unto Co should be move not withheld all in all for some timeRetained lettuce should be invested back in Unto (Correct)Q16. stack away a buttoned-down policy, the inventory levels & receivables are unploughed gritty resulting lengthy capital operate cycles pencil lead to a take aim for finance via overdraft facilities. Overdraft results finance cost.Q17. CThe company unplowed its inventory levels at the minimum having a high risk of stockouts which indicates the Aggressive investing policy was use by Kelp Co.s anterior owners.Q18.The efficient prudence of inventory receivables relates to a halt enthronisation policy straight If cus tomers pay late to a company this will increase the cash cycle originalQ19.Assets are bought in their individual seasons displace circulating(prenominal) ASSETSAssets act for more than a year NON-CURRENT ASSETSAssets present with the company at any presumptuousness over time of the year aeonian CURRENT ASSETSQ20. BThe traditionalist policy monetary resource to the highest degree fluctuate assets with long-term finance and pecuniary resource all permanent assets with long-term finance. Resulting low risk finally upward(a) liquidity but change magnitude profitability.Q21. The call utilise in each policy are alike only.Q22. totally given supra are the factors which can turn the working capitalQ23. D