1.

RATIOS are your business scores that come from your Income Statement and Balance Sheet, not
the Cash Flow Statement.

2. "A part of the organisation where the manager has responsibility for generating revenues,
controlling costs and producing a satisfactory return on capital invested in the division." -
DIVISION

3. "Business practices designed by companies to make production and delivery systems more
competitive in world markets by eliminating or minimizing waste, errors, and costs." -
REENGINEERING

4. "Credit analysis, or the assessment of creditworthiness, is undertaken by analysing and

evaluating information relating to a customer s history?" - FINANCIAL

5. "Liquid funds, for example cash, earn no return and so will not increase profitability. " - TRUE

6. "Rate risk refers to the fact that when short-term finance is renewed, the rates may vary when
compared to the CURRENT rate. "

7. "The factors to be considered in formulating a trade receivables policy relate to credit analysis,
credit control and receivables collection." TRUE

8. "The length of the cash OPERATING CYCLE depends on working capital policy in relation to the
level of investment in working capital, and on the nature of the business operations of a
company."

9. "The main reason that companies fail, though, is because they run out of CASH

10. "The objective of liquidity ensures that companies are able to meet their liabilities as they fall
due, and thus remain in business." TRUE

11. "Working capital investment policy is concerned with the level of investment in assets, with one
company being compared with another." CURRENT

12. VARIABLE Interest rate depends upon an index and increases or decreases.

13. INSURANCE can also be used to cover some of the risks associated with giving credit to foreign
customers

14. Aggressive working capital finance means using more SHORT term finance

15. Baumol model and the Miller-Orr model belong to CASH Management.

16. Cash in hand and cash at bank are examples of CURRENT Assets.

17. Companies with the same business operations may have levels of investment in working capital
as a result of adopting different working capital policies. - DIFFERENT
18. Current assets /Current liabilities describes QUICK Ratio.

19. Dividend has no relationship with the value of the firm as per Walter Model. - NO/FALSE

20. Funds held in the form of cash do not earn a return. - TRUE

21. Holding costs can be MINIMISED by reducing the level of inventory held by a company.

22. Implicit cost is the cost of using the funds. - TRUE

23. Inventory and receivables are both current assets. - TRUE

24. Is it right to say that good cash management is an essential part of good working capital
management. - ALWAYS

25. JIT stands for just in TIME

26. Money paid (cost of credit) for the use of money. - INTEREST

27. Optimum cash balance must reflect the expected need for cash in the next budget period. -
ALWAYS

28. Receivables management is all about CREDIT MANAGEMENT

29. Sales made but not collected is known as A/Cs RECEIVABLES

30. Short-term finance is more flexible than long-term finance. - TRUE

31. Short-term finance is more risky than long-term finance. - SOMETIMES

32. Short-term finance tends to be more FLEXIBLE than long-term finance.

33. The MATCHING principle suggests that long-term finance should be used for long-term
investment.

34. The cash operating cycle is the average LENGTH of time between paying trade payables and
receiving cash from trade receivables.

35. The process of calculating present value of projected cash flows. - DISCOUNTING

36. The sales of a business or other form of revenue from operations of the business is called as
TURNOVER

37. Traditionally the role of finance manager was restricted to PROCUREMENT Of funds.

38. Wealth management and profit maximisation are the concepts. - YES/TRUE

39. Which model belongs to cash management? - MILLER ORR

40. Which technique brings inventory and cash requirment drastically down? JUST-IN-TIME (JIT)