MCQ on Working Capital Management: Check the below Financial and Strategic Management MCQ on Working Capital Management with Answers Pdf free download. Financial and Strategic Management MCQ on Working Capital Management Questions for Financial and Strategic Management with Answers were prepared based on the latest exam pattern. We have provided Financial and Strategic Management MCQ on Working Capital Management with Answers to help students understand the concept very well. Students should practice CS Executive MCQ on Working Capital Management Questions with Answers based on the latest syllabus.

MCQ on Working Capital Management

1. Working capital =
(A) Core current assets less current liabilities
(B) Core current assets less core current liabilities
(C) Liquid assets less current liabilities
(D) Current assets less current liabilities

2. Contingencies are –
(A) Added to gross working capital
(B) Deducted from gross working capital
(C) Contingencies are not considered in financial management; it is considered in accounts only
(D) None of the above

3. While calculating working capital based on cash cost –
(A) Depreciation is ignored
(B) Non-cash items are not considered
(C) Debtors are calculated on the basis of the cost of goods sold and not on sale price
(D) All of the above

4. Negative working capital means that –
(A) The company has no current assets at all
(B) The company currently is unable to meet its short-term liabilities
(C) The company has negative earnings before interest and tax
(D) The company currently is able to meet its short-term liabilities

5. For reducing and controlling working capital requirement which of the following step is required to be taken –
(A) Increase in manufacturing cycle
(B) Increase of credit period allowed by creditors to the extent that does not affect the production
(C) Increase in credit period given to customers
(D) All of the above

6. Working capital is also known as ______.
(A) Operation capital
(B) Operating capital
(C) Current assets capital
(D) Capital relating to main projects of the company

7. Working capital is a highly effective barometer of a company’s efficiency and effectiveness.
(A) Operational and servicing
(B) Longterm
(C) Operational and financial
(D) Positive and negative

8. Positive working capital means that ______.
(A) The company is able to pay off its long-term liabilities
(B) The company is able to select profitable projects
(C) The company is unable to meet its short-term liabilities
(D) The company is able to pay off its short-term liabilities

9. Which of the following method is not used for calculating the working capital cycle?
(A) Percentage of sales method
(B) Regression analysis method
(C) Operating cycle approach
(D) Trial and error method

10. Other things remaining constant, if the debtors increase as compared to last year it means –
(A) Company has a poor credit policy
(B) Company has a positive working capital
(C) Company has a negative working capital
(D) Company has no working capital

11. Which of the following analyzes the accounts receivable, inventory, and accounts payable cycles in terms of a number of days?
(A) Operation cycle
(B) Current asset cycle
(C) Operating cycle
(D) Business cycle

12. Initial Working Capital
(A) Supplies the funds necessary to meet the current working expenses
(B) Is used to raise the volume of production by improvement or extension of machinery
(C) Is required at the time of the commencement of business
(D) Represents the amount utilized at the time of contingencies

13. One of the important objective(s) of working capital management is/are –
(A) To maintain the optimum levels of investment in current assets.
(B) To reduce the levels of current liabilities
(C) Improve the return on capital employed
(D) All of the above

14. Fluctuating Working Capital is also called as –
(A) Reserve Margin Working Capital
(B) Temporary Working Capital
(C) Permanent Working Capital
(D) Variable working capital

15. Operating cycle is also called as –
(A) Working cycle
(B) Business cycle
(C) Current asset cycle
(D) Working capital cycle

16. The capital which is needed to meet the seasonal requirements of the business –
(A) Gross Working Capital
(B) Reserve Margin Working Capital
(C) Net working capital
(D) Fluctuating Working Capital

17. A higher current assets/fixed assets ratio indicates –
(A) Hedging Approach
(B) Conservative Approach
(C) Matching/hedging Approach
(D) Aggressive Approach

18. Gross working capital refers to –
(A) The amount utilized at the time of contingencies
(B) The firm’s investment in current assets
(C) The capital which is required at the time of the commencement of business
(D) The working capital which is necessary on a continuous and uninterrupted basis

19. If a firm has insufficient working capital and tries to increase sales, it can easily over-stretch the financial resources of the business. This is called –
(A) Over rating
(B) Overtrading
(C) Overcoming
(D) Overtone

20. Which of the following represents the amount utilized at the time of contingencies?
(A) Reserve Working Capital
(B) Net working capital
(C) Extra working capital
(D) Fixed working capital

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