Mark the appropriate Answer & give proper explanation for same
1. Which of the following is used to calculate working capital? a) Preference Dividend b) Intangible Assets c) Operating Profit d) Accruals
2. A company has a current ratio of 2.5 and Rs. 90,00,000 as it’s working capital. Calculate the amount of current assets and current liabilities. a) 1,50,00,000 b) 2,00,00,000 c) 4,50,00,000 d) None of the above
3. Which of the following would be consistent with a more aggressive approach to financing working capital? a) Financing short-term needs with short-term funds. b) Financing permanent inventory buildup with long-term debt c) Financing seasonal needs with short-term funds. d) Financing some long-term needs with short-term funds.
4. Which of the following statements concerning financial risk are correct? I. Financial risk is the risk associated with the use of debt financing. II. As financial risk increases so too does the cost of equity. III. Financial risk is wholly dependent upon the financial policy of a firm. IV. Financial risk is the risk that is inherent in a firm's operations . a) I and III only b) II and IV only c) II and III only d) I, II, and III only e) I, II, III, and IV
5. There is deterioration in the management of working capital of XYZ Ltd. What does it refer to? a) That the Capital Employed has reduced b) That the Profitability has gone up c) That debtors collection period has increased d) That Sales has decreased.