Working Capital Paper 2

1

If a firm increases its cash balance by issuing additional shares of common stock, net working capital






2

Starrs Company has current assets of $400,000 and current liabilities of $300,000. Starrs could increase its net working capital by the






3

The working capital financing policy that subjects the firm to the greatest risk of being unable to meet the firm’s maturing obligations is the policy that finances






4

Clay Corporation follows an aggressive financing policy in its working capital management while Lott Corporation follows a conservative financing policy. Which one of the following statements is correct?






5

Which of the following is not a function of financial management?






6

All of the following statements in regard to working capital are correct except:






7

Determining the appropriate level of working capital for a firm requires






8

Which of the following actions is likely to reduce the length of a firm’s cash conversion cycle?






9

Eagle Sporting Goods has $2.5 million in inventory and $2 million in accounts receivable. Its average daily sales are $100,000. The firm’s payables deferral period is 30 days and average daily cost of sales are $50,000. What is the length of the firm’s cash conversion period?






10

Jones Company has $5,000,000 of average inventory and cost of sales of $30,000,000. Using a 365-day year, calculate the firm’s inventory conversion period.






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