# Working Capital Management – Financial and Strategic Management MCQ

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Working Capital Management – Financial and Strategic Management MCQ

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Following is the balance sheet of PBX Ltd. Calculate maximum permissible bank finance by the Third Method of Tandon Committee norms. Assume the level of Core Current Assets to be ₹ 60 lakhs.

Liabilities ₹ Lakhs
Equity Shares (₹ 10 each) 400
Retained Earnings 1,000
Public Deposits 200
Bills Payable 200
1,960

 Assets ₹ Lakhs Fixed Assets 1,000 Current Assets: Raw Material 200 Work-in-progress 300 Finished Goods 150 Debtors 200 Cash at Bank 110 1,960

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If a firm has ₹ 100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firm’s Net Working Capital?

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Outstanding overheads appearing in the balance sheet are 9,75,000. Lag in payment of overheads is 30 days. Overheads accrue evenly throughout the year. Total overheads incurred by the company are –

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Total wages for the year of Rakshit Ltd., a listed company are ₹ 64,80,000 out of which ₹ 2,40,000 are paid in cash immediately after they became due.Lag in payment of wages -1 month. If you are appointed to prepare a working capital statement for the company, then how much outstanding wages you will take while preparing a working capital statement?

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Toted ‘cost of sales’ and ‘sales’ of Gama Ltd. is ₹ 3,19,80,000 and ₹ 4,13,40,000 respectively. It makes 20% sales on a cash basis. Debtors are allowed 2 months credit period. If the company calculates working capital on a cash cost basis then debtors are __

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If current assets are ₹ 1,09,05,750 and current liabilities are ₹ 32,50,000 then maximum permissible bank finance as per second method of Tandon Committee norms is ___

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Debtors velocity = 3 months Sales = ₹ 25,00,000Bills receivable & Bills payable were ₹ 60,000 and ₹ 36,667 respectively.Sundry debtors =?

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No. of operating cycle in a year=4.5No. of days in year = 360 daysWorking capital = 8,40,000Operating cost =?

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NS Ltd. gives the following information:Current Ratio = 2.4Quick Ratio =1.0Stock = ₹ 5,60,000Current Assets = ?

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The operating cycle days of Ramji Ltd. is 167 days. Other details are as follows:Raw material stock velocity 79 daysDebtors collection period 70 daysWIP conversion period 3 6 daysFinished goods 29 daysconversion periodCreditors payment period =?

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S Ltd. gives the following information:Networking capital ₹ 2,80,000Current ratio 2.4Liquid ratio 1.6Current Assets =?

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N Ltd. gives the following information:Current Ratio 2.8Total assets ₹ 60,00,000Fixed assets ₹ 32,00,000Current liabilities =?

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Creditors payment period = 60 daysMaterial consumed = ₹ 1,20,000Material purchased in cash = ₹ 10,000Material purchased on = ₹ 90,000 creditCreditors that will appear in balance sheet and working capital statement = ?Note: 1 Year = 360 days

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KT Ltd.’s opening stock was ₹ 2,50,000 and the closing stock was ₹ 3,75,000. Sales during the year were ₹ 13,00,000 and the gross profit ratio was 25% on sales. Average accounts payable are ₹ 80,000. Creditors Turnover Ratio =?

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Current assets of Z Ltd. are ₹ 3,70,000 which includes stock ₹ 1,00,000 and prepaid expense ₹ 70,000. Its current liability are ₹ 1,60,000 which includes provision for tax ₹ 60,000.Liquid Ratio =?

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From the following data calculate the finished goods conversion period for the years 2019 & 2020.Note: 1 Year = 360 days

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Raw material consumption = ₹ 6,48,000Raw material purchase = ₹ 8,42,000Annual cost of production = ₹ 14,42,000Creditors = ₹ 75,000Bills payable = ₹ 25,000Creditors Payment Period = ?Note: 1 Year = 360 days

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Equity ₹ 5,67,500, Reserve & surplus ₹ 3,87,850, total debt ₹ 5,88,778 out of which ₹ 2,88,778 are long term debt, fixed assets are ₹ 11,44,128.

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Opening stock ₹ 1,75,000, Total purchase ₹ 10,75,000 including cash purchase ₹ 1,75,000, total sales ₹ 15,00,000 out of which 2096 are on cash basis. Closing stock is ₹ 1,50,000. Stock turnover ratio =?

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Calculate the working capital from the following data:

 Particulars ₹ Raw Material Stock 11,70,000 WIP Stock 9,58,750 Finished Goods Stock 26,65,000 Debtors 55,12,000 Cash & Bank 6,00,000 Creditors 17,55,000 Outstanding expenses 14,95,000

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It is understood that a current ratio of _____ for a manufacturing firm implies that the firm has an optimum amount of working capital.

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Which of the following is/are method of maximum permissible

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Which of the following is not correct with the matching strategy?

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Tandon Committee Report on Working Capital relates to norms for

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Hardcore working capital is also known as –

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Permanent working capital –

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_____varies inversely with profitability.

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To carry on a business, a certain minimum level of working capital is necessary on a continuous and uninterrupted basis. This requirement is referred to as –

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Current assets are those assets –

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A lower current assets/fixed assets ratio means –

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Which of the following represents the amount utilized at the time of contingencies?

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A conservative policy implies –

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The aggressive approach covers those policies –

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The capital which is needed to meet the seasonal requirements of the business –

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Operating cycle is also called as –

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One of the important objective(s) of working capital management is/are –

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Which of the following statement is correct?

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Initial Working Capital

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Which of the following method is not used for calculating the working capital cycle?

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Negative working capital means that –

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Statement I:Maintaining adequate working capital is not just important in the short term. Sufficient liquidity must be maintained in order to ensure the survival of the business in the long term as well.
Statement II:Even a profitable business may fail if it does not have the adequate cash flow to meet its liabilities as they fall due.

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For reducing and controlling working capital requirement which of the following step is required to be taken –

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Which of the following will be considered while calculating working capital?(1) Short Term Advances(2) Stock of WIP(3) Short Term Investments(4) Perpetual inventory policy

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Working capital =

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Working capital is also known as___

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