WCM (KMB FM 04) ea points ‘Pre University Examination: Attempt all 45 questina, Each quection cary two mark each. (00 390) Emall® ‘shikeshSS651@grsilcom V 44.\hich ica betterinccator ofa companys uy? * 2 © aunent rato © serra Z © working capita ratio O Alert above XX 43. the operating cyete for most companies wilbe ‘than one 02 year.* © loraer x O shorter O wostort© seolens correct anewer © stoner XX 2.Which technique of working capital forecast the banks prefer * a. © casnrcecasing mena O Projectedbaance set metdod © operating yete method O None these onset answer @ operating eyote method X19. What i the difference between the current ratio andl the aulek ratio? *0/2 © The current ratioincludes inventories an the quick ratio does not. © Tre curren ratio doesnot include inventories ant the quik aio does @ ‘the curent rao includes physieal capital andthe quick ratio doesnot x (© Tre current ratio doesnot include physical capital andthe quick ratio dees correct anewor© The cament tones inventries nd the quick ratio does at. 28, Spontaneous financing includes. © Accounts recevabes © Accounts Payabies © short term ans © Aline eet Comect answer © stortiemioans DATE OF EXAM:* 07 104 2001 V_ 38:Indeciaing the appropriate evel of current assets forthe frm, managements confronted with * © atraceot between profitability endrisk O ateaceot between quit and marketbiyO tradeoff between equity and cobt O tradeoff between short term versa long term boring EMAILID:* ‘hikesh85651@gracom [NAME OF THE STUDENT* vtikesh < 9, VED analysis method is used when: * machines ate used rmateriis ae see workers are used lomemen} X14. The time period between placing two successive ordersis called 0/2 andthe time period between oreringanitem fo resleishment land actually receiving the Kem into the inventory is called as,© A tecdme, oer yee x O Bower yee tedtine O core eee iste ime O Aiderie, ore eyes Connect answer © 8 oer 06nd tine ‘%_12Which among the fllowing components is calculated. the sum of 2/2 the fixed costs that happen each time an item is ordered? * O canning cost © Border cost Uv O cittaiang cost © a storing cost XX _3.Working capitals also known as * oe. © cyte cape x © erating cata (O evolving capital,© bath 2nd > correct anewer © somzees vom isthlongh of time between thefis actuleash 22 cxpendtue ants own cash ect. © setopeningyele v O cat eamerson et O wang one © Grose operating oye XX LWhat are the primary objectives of Working Capital Management? * 0/2 © cpumzaton ot woking Capa pean ye x © Minis cost ot expt © sate wring cata O Mottteaboe corect enaer © Alot ine above‘Y_ 38.Costsof not carrying enough inventory include: * O bestest © customer appointment © posse wore aya @ Mortnace ‘Y__45.1f everything else remains constant and e fim increasesits cash ‘conversion cycle, its proftailty wil ikely * O ineranse © ncrease't earnings are postive © cecrease O notattected V_42. John's company has assets of 90 Millon andlabites of 70 Millon \What is the working capital ofthe company (shown as cash)? * © 160 mition O soraton© 220 mon © raion X18. The main purpose of factoring accounts receivables: © ‘wereate an adetional guarante of collection O ‘stabs a legal proot or future vse © tweet immetite cash needs © ‘inves sccounts revevabe in another business © tomes inemesiate cash needs V_25,\When managing cash and short-term investments, 2 corporate ‘treasurer isprimarly concerned with * O Maximizing ate of return © Mivmizng taxes, © ‘Investing in Teasiry bonds since they have no defaut sk © Lguiity and stery aX_ TL in the ABC Analysis systom the B category stands for_.* a © A outstanding importance in valve © 8 -comparatvey unimportant in value © ©. comparatuey important invalue x © dAverage importance in value Comect answer © 0 merage importance in vaue YB cents inversely with profitability. * 2 © sary O sme O stock © bonds V__7-The cash discount (also known as purchase dlscount or sale discount) 2/2 Js given to customers for:* © eat payments yj© but purchase © teequent purchases © send pune tans X__4.Whichis not the technique of Cash Management? * oe. © cosh Budget © cashew statement © une Fw Statement © one oF THe ABOVE x Comect answer © Fans iowsatement 13. Accmpany titania sutflet ety mrginbyhawng ext 272 _rventory against certain situations are termed as O Aovectry O Bote © Cate stock vi O teat‘Y_ 38.Concentration banking* O Increases ise balances © moves excess funds from a consentration bank to regional banks © ‘stess important dung periods of sing interest rates. ® improves conel over corporate cas. X- 6.1n the tockbox system, customers mall checks to which ofthe folowing? * O Apostate box O Te Boriness © Tredusines bane © Aessn contest center correct answer @© Apostotice box on. 2O A tepining inventory total goods sold © Bsverage inventory at cost, ending inventory © © .costof goods sold average inventory et cost v © 2 Total goods sold, cost of goods sold X_ 2.Theamountof cash thetafmbeepsonhand norlertoteke or advantage of ny bargain purchoses rat may arise ireteredtoasits* © Tonsecen mowe x O Specsatve mote © Precautions mative O compensavonmsive Correct answer © secutive motive ‘_ 22.Aprecautlonary motive for holding excess cash is * 2 © & Tenable a company to meetthe cas demands rom the normal low of business © B.teenable company to aval se oe seca memory purchase before ces "ie to higher levels i © Toenabl {company to have cash to meet emergencies that may aise© periosteal © 4 ]2sols hang ose vanous pes oendng arangemetanaiele to cover projected cach deficits V_ 32.Commercial paper is essentially * © anoter term fo unk bond © ashoreimunsseued corporate Ou. O an etermediate tem corporate bond ‘cernficate that may be exchanged for sheteof commen stock st aepecified fara date X15. entity the two components that make up the EO equation. © Aover cost soup cost O B.cwsiycostsotcost © 6 Annuatusage.camyingeost © b.ousliyceet annul usage Conct answer © © rnnustusage, caring cost41. Working capital ratios * O wrk eeprarastes ) working eaptttot assests © cae sssets/ourent abies O caments assetsieaes VY. 2. Alock-box system * © a Reauces the ned for compensaina balances. O b Provide security fora night deposits © e-Reauoes me rk oF having eckslstn the ma © 4 Accelerates the nlow of funds Y_ 10.Working capital cycle involves the following: a)Acquistion of raw ‘materials b finished goods c) receivables d) cash e) workin progress. Which ofthe folowing sequence is correct? * O aveae @ renee O baadeO aeden V. 24.Allof the folowing are vali reesens for abusinesstehotdcash and 272 rarketable secures except t* © saat sompeneing balance ressements © Maintain adequate ath nuded or transactions O Meet ture nets © Ea marimum etuns on investment assets v < 34. If EO = 360 units, order costs are $5 per order. and carrying costs 2/2 ‘are $20 per unit, what is the usage in units? * 2sezunite Yi 18720 units oo@g°o 2ss20 uns V_ 5.Which is managed out ofthe folowing, under cash management? * 2/2cash ‘cash and Bank Balances ‘cach and Cashequvalentaceets yi None of these Oo@00 ROLLNO* VW. 9.Wihich of the following are the sources of working capital? * 2 © ‘loans and sevances from commercial banks O Traecresit © inaigenous bonkers © aot ne above. ¥ ‘37. Whict of the folowing would be consistent with amore aggressive 2/2 approach to financing working capital? * (© Financing short-term needs wth shor term funds O Financing permanent inventory buldp with long-term debO Financing seasonal needs with short-term funds © Financing some longterm needs with shortterm funds. < 31: Time consumed in clearing check through the banking system." O° Processing flat ° eposit Neat collection fost avalebilty oat @o £8. The accounts receivable that cannot be collected because oftheir bankruptcy or another reason are termed as: * Colleenibe seeounts doubtful customers Lncotestibe sosounts @ooo > _40.Which snot the long-term source of working captal-*eee x O stains eninge © ta temtoae © Posse os teaton Conct never © Provision fortaxatin X20. Which ofthe following is not a metric to use for measuring the length 0/2 (of the cash cycle? * O peistestaaye © Accounts receivable days © Accounts payoble dys. © inven doe. x caectaneer © sesrenca, 7 30.Marketabe secures re primarty* n © shores dese nstument vO shorter ety secutien O ‘eng:trm debt instants © lonpterm ent secures V__T.The payment terms 2/10, 930 telus that:* 2 10% ciscount wil be awarded i the payments mede within 2 days of luce date, © carecnise the ful amount is payable within 30 days of invice date © 32% dsomunt wi be andi he payment is made within 10 months of nce ate; otherwise, tne ful amount ie payable within 30 month of invoice cate © 305% scour wl be awarded he payments made wihin 10 days of molee ate; otherwise, tefl amounts payable within 30 days of imoice cate. @ 32% scour wb aware he payments made win 10 69p8 invoice ‘ate otherwise, te ful amount is paysbe within 80 days of invoice cate X._26.When a firm need short term funds for specific purpose, the bank 0/2 ‘oan wi kay be 2:* O Tranaactiontoan O Ineot cn © compensating blence arangement x © revolving creat agiement Correct anewer© Teneacionioan V__29.Financing along-lved asset with short-term financing would be* 2/2 O ancxampie oF moderate risk~ moderate potenti) proftabily” asset Anarcing O example of ow rk-—low (potenti) profitably asset thancing. © enexampie of hgh sisk- gh (potent) profitability esse nancng. v O anesampie othe hedging approact to francis. SECTION* “Tia tom nes cated inde ot Laan Menagement Reseach, Google Forms