Working Capital

WORKING CAPITAL Q1. Which of the forthcoming is the chief most external of afloat excellent? (MCQ)The dissimilarity among running possessions & running liabilitiesA adjust of having liquescent possessions to determine the production is unchangedManagement of special afloat excellent componentsWorking excellent segregation using kindreds(2 marks) Q2. Calcuspent the Running Kindred & Hasty Kindred using the beneath notification. (MCQ)$000Inventory 200Receivables 670Payables 235Bank hypothecation 85Current Kindred 0.37, Hasty Kindred 0.27Current Kindred 0.58, Hasty Kindred 0.31Current Kindred 1.76, Hasty Kindred 1.54Current Kindred 2.71, Hasty Kindred 2.09(2 marks) Q3. Pick Co. sold 20% of its register on belief for 10% avail. What obtain be the commodities on the hasty kindred & running kindred aftercited the register sale, if all else is resembling? (MCQ)Current Kindred (Increase), Hasty Kindred (Increase)Current Kindred (Increase), Hasty Kindred (No exchange)Current Kindred (No exchange), Hasty Kindred (Increase)Current Kindred (Increase), Hasty Kindred (Decrease)(2 marks) Q4. Inkle Co has receivables turnover of 8 opportunitys, a payables turnover of 4.5 opportunitys and an register turnover of 2.25 opportunitys. Calcuspent money at-liberty cycle assuming 365 days in a year? (MCQ)46 Days81 Days127 Days162 Days(2 marks) Q5. Which of the forthcoming TWO announcements are redress in connection to afloat excellent policies for a manufacturing audience and a maintenance retailer? (MRQ)A manufacturing audience obtain scarcity to endue in raw symbolical and movables in extensive totalitys to be owing to its customersA maintenance retailer obtain keep a extensive register of extensive receivables adjustA manufacturing audience scarcitys no accounts receiveffectual systemA maintenance retailer obtain scarcity to meditate register administration system (2 marks) Q6. Mafia Co is a manufacturing audience and has the forthcoming ends. Periods DaysReceivables store 70Raw symbolical turnover 42Work in way turnover 14Finished commodities turnover 42Payables acquittal 495334032258000What is the opportunity it takes to adequate a afloat cycle? (FIB) Days(2 marks) Q7. Which of the forthcoming best describes the afloat excellent turnover? (MCQ)It measures a audience's force to restore its afloat excellentIt measures the afloat excellent assistance to the fruitssIt measures the liquescentity standing of the audienceIt measures the availforce standing of the audience (2 marks) Q8. Yolo Co. has the forthcoming inventories:Raw symbolical $600Work in way $550Finished commodities $700Yolo Co has annual dissipations of $5,000 failure the absorb of sales entity $2,000. What are the middle register days for Yolo Co (366 days in a year)? (FIB)23495-317500Days(2 marks) Q9. A audience sells toy muniment guns in the USA; it per-annum sells 15,000 guns at $60/each. It has to take $56,000 from its customers. In how divers days obtain the audience take all its acquittals? (MCQ)10 Days23 Days63 Days98 Days(2 marks) Q10. A failure in acquittal to the suppliers may movables which of the forthcoming? (MRQ)Future contracts failure the suppliers may be disruptedA abatement on spent acquittal obtain be missedGoodobtain in the traffic obtain be acceptiondAn acception in the charge of products as a satisfaction (2 marks) Q11. Which of the forthcoming is not a ordinary mark of overtrading? (MCQ)A forcible acception in fruits A bank overdraft reaching its occasion A drop in the hasty kindred and the running kindred A drop in commerce payables days(2 marks) Q12. A audience has very eminent razes of register and eminent money adjusts. This is an mark of? (MCQ)Over-tradingHigh money at-liberty cycle Over-capitalizationLow afloat excellent cycle (2 marks) Q13. Select whether the forthcoming announcements are penny or spurious. (HA)An acception in sales fruits should slight to acception the raze of afloat excellent endueed TRUE FALSEA availforce lessen is an mark that the commerce cycle has been acceptiond TRUE FALSEUnder-capitalization is the accelerated acception in sales as compared to the endueed finance TRUE FALSE(2 marks) Q14. Match the forthcoming kindreds in similitude to test the over-trading problems. (P;D)A forcible acception in sales Customers are paying spent than their belief end Running liabilities are in redundancy of Running possessions WORKING CAPITAL GROWTH % QUICK RATIO % INCREASE IN RECEIVABLES(2 marks) Q15. Unto Co is an online sales audience which has certain its matter in the spent two years. The CFO has implied that the audience has spacious its matter and gained a good-natured-natured traffic distribute in these two years but to movablesual to endure aid they obtain scarcity to contrive its afloat excellent commoditiesively. Which of the forthcoming actions susceptibility aid conquer Unto Co problems? (MRQ)The distributeholders obtain be asked to inject finance into Unto CoInventory razes should be acceptiond by Unto CoSales of Unto Co should be failureheld for some opportunityRetained avails should be endueed end in Unto (2 marks) Q16. An enduement system is the totality of afloat excellent enduement scarcityed for a detail audience. Which of the forthcoming announcement kindred to a unsuppressed system? (MCQ)Company care a low raze of register obtain manage an antecedent money at-liberty cycleA verbose money at-liberty cycle may manage to eminent finance absorbInventory razes ; receivables should be kept at an optimum razeA limited money at-liberty cycle may manage to facilitatey matter(2 marks) Q17. Kelp Co has kept its register razes at the poverty raze from the set-out of the matter. The matter was habitual by a opponent and they endured its production as per their foregoing possessors. In the ultimate three months, the audience is uneffectual to encounter the yield demands due to a limitedage of register. The new possessor of Kelp Co is uneffectual to own the afloat excellent system. Select the mismismisembezzle afloat excellent system? (MCQ) Unsuppressed enduement systemAggressive financing systemAggressive enduement systemConservative financing system(2 marks) Q18. Select the mismismisembezzle discretion. (HA) The prolific administration of register ; receivables recites to a ordinary enduement system TRUE FALSEIf customers pay spent to a audience this obtain acception the money cycle TRUE FALSE(2 marks) Q19. A audience scarcitys finance to endue in their possessions. Select the mismismisembezzle asset in connection to afloat excellent financing system. (P;D)Assets are bought in their appertaining seasons Possessions endure for further than a year Possessions introduce failure the audience at any dedicated opportunity of the year NON-CURRENT ASSETS PERMANENT CURRENT ASSETS FLUCTUATING CURRENT ASSETS(2 marks) Q20. Which announcement best reflects a unsuppressed afloat excellent finance system? (MCQ)More limited-term finance is used owing it's facilitateyMore long-term finance is used owing it improves liquescentityMore limited-term finance is used to dissipation registerMore long-term finance is used to pay-off payables(2 marks) Q21. Select the forthcoming similarities in an Bombardment & financing afloat excellent system. (MRQ)The facilitate of hoard out in the systemThe names used in each systemThe use of possessions in the systemThe raze of register in the system(2 marks) Q22. Which of the forthcoming factors could keep an bias in afloat excellent? (MRQ)Company belief policies The advenient enlargement prospectThe adjust of liquescentity & availabilityThe sort of the audiencePayeffectual belief policies of suppliers(2 marks) Q23. Which of the forthcoming is a good in having a decentralized provision province in a audience? (MCQ) The duplication of workThe good of massiveness abatementingThe low-interest rates applied by the bankThe bud of skills of contrivers (2 marks) WORKING CAPITAL (ANSWERS) Q1. BThe dissimilarity among running possessions & running liabilities (Definition)A adjust of having liquescent possessions to determine the production is unchanged (Objective)Management of special afloat excellent components (One of the aspects of WC)Working excellent segregation using kindreds (One of the aspects of WC) Q2. DCurrent Kindred = [200+670] ÷ [235+85] = 2.71Quick Kindred = [670] ÷ [235+85] = 2.09 Q3. AThe Hasty kindred = IncreaseThe register sold on belief, all else entity resembling receivables (running possessions) obtain acception, so the hasty kindred obtain acception.The Running kindred = IncreaseCurrent possessions comprise Register & Receivables. The register sold for avail, the receivables acception obtain be further than the lessen in register, the net commodities obtain be the acception in running possessions, hence kindred acceptiond. Q4. CReceiveffectual days= (365 ÷ 8) = 46 daysInventory days = (365 ÷ 2.25) = 162 daysPayeffectual days = (365 ÷ 4.5) = 81 daysCash at-liberty cycle = (46 + 162) – 81 = 127 days Q5.A manufacturing audience obtain scarcity to endue in raw symbolical and movables extensive totalitys to be owing to its customers (Correct)A maintenance retailer obtain keep extensive register failure inferior receivables adjustA manufacturing audience scarcitys scrupulous meditateation of accounts receiveffectual systemA maintenance retailer obtain scarcity to meditate register administration system (Correct)Q6. 119 daysWorking Excellent Cycle= (70+42+14+42) – 49 = 119 Q7. BQ8. 91 daysRaw symbolical days = (600 ÷ 5,000) × 366 = 44 daysWork in way days = (550 ÷ 2,000) × 366 = 101 daysFinished commodities days = (700 ÷ 2,000) × 366 = 128 daysAverage days = (44 + 101 + 128) ÷ 3 = 91 days Q9. BSales = 15,000 × 60 = 900,000 Receiveffectual days = (56,000 ÷ 900,000) × 365 = 23 days Q10. Advenient contracts failure the suppliers may be disrupted (Correct)A abatement on forthcoming acquittal obtain be missedGoodobtain in the traffic obtain be lessendAn acception in the charge of products as a satisfaction (Correct) Q11. DOvertrading is matter reserved to do too plenteous too hastyly failure too mean long-term excellent. The acquittal end to accounts payeffectual is slight to elongate (not limiteden). Q12. COver-capitalization represents an redundancyive enduement by a matter in its running possessions. In the condition register & money adjust twain respent to running possessions of a matter. Q13. An acception in sales fruits should slight to acception the raze of afloat excellent endueed TRUE A availforce lessen is an mark that the commerce cycle has been acceptiond TRUE Under-capitalization is the accelerated acception in sales as compared to the endueed finance TRUE Q14. A forcible acception in sales Afloat excellent enlargement %Customers are paying spent than their belief end % Acception in ReceivablesCurrent liabilities are in redundancy of Running possessions Hasty Ratio Q15. The distributeholders obtain be asked to inject finance into Unto Co (Correct)Inventory razes should be contrived prolificly by Unto Co Sales of Unto Co should be lowered not failureheld adequately for some opportunityRetained avails should be endueed end in Unto (Correct) Q16. BIn a unsuppressed system, the register razes & receivables are kept eminent movablesing longer money at-liberty cycles manageing to a scarcity for finance via overdraft facilities. Overdraft movabless finance absorb. Q17. CThe audience kept its register razes at the poverty having a eminent facilitate of hoardouts which indicates the Aggressive enduement system was used by Kelp Co.'s foregoing possessors. Q18.The prolific administration of register ; receivables recites to a ordinary enduement system TRUE If customers pay spent to a audience this obtain acception the money cycle TRUE Q19.Assets are bought in their appertaining seasons FLUCTUATING CURRENT ASSETSAssets endure for further than a year NON-CURRENT ASSETSAssets introduce failure the audience at any dedicated opportunity of the year PERMANENT CURRENT ASSETS Q20. BThe unsuppressed system finances most questionable possessions failure long-term finance and finances all persistent possessions failure long-term finance. Resulting low facilitate besides decent liquescentity but decreasing availability. Q21. The names used in each system are identical singly. Q22. All dedicated overhead are the factors which can bias the afloat excellent Q23. D