Question 1. Which of the following ratios does not measure working capital?
a. quick ratio
b. current ratio
c. current-assets-to-total-assets ratio
d. current-assets-to-sales ratio
Question 2. Which of the following best illustrates the importance of a working capital strategy?
a. monthly effects, resources of the firm, financial reporting, and ability to adjust fixed assets
b. daily effects, resources of the firm, pro forma financial statements, and ability to adjust all assets
c. weekly effects, resources of the firm, financial reporting, and ability to adjust current assets
d. daily effects, resources of the firm, financial reporting, and ability to adjust current assets
Question 3. Companies with a conservative working capital strategy have which of the following characteristics:
a. cash balances are at a minimum
b. receivables are relatively low
c. inventories that are generous to reduce the possibility of a stock out
d. current asset levels are balanced
Question 4. The rate of return on an investment project assuming that future cash flows are invested at the cost of capital instead of the internal rate of return is called the modified internal rate of return.
True
False
Question 5. The relationship between inflation rates and the time of maturity of debt is called the yield curve.
True
False