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CA Inter Working Capital — practice questions

Explore 62 free Working Capital questions in CA Inter Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Working Capital questions and exercises with answers

Showing questions 1–30 of 62.

How is net working capital calculated?Read the answer and worked solution →Gross working capital is equal to which item?Read the answer and worked solution →Current assets below current liabilities means the firm has what?Read the answer and worked solution →Trade working capital differs from working capital because it excludes what?Read the answer and worked solution →Among the key working capital accounts, which is a current liability?Read the answer and worked solution →Which part of long-term debt is counted in current liabilities?Read the answer and worked solution →Which change would raise a firm's net working capital?Read the answer and worked solution →The working capital cycle is also known by what name?Read the answer and worked solution →Why is a longer working capital cycle undesirable for a firm?Read the answer and worked solution →Which step shortens a firm's working capital cycle?Read the answer and worked solution →Why do funders prefer a firm to show positive working capital?Read the answer and worked solution →A newspaper may show negative working capital without distress becauseRead the answer and worked solution →What is the main goal of working capital management?Read the answer and worked solution →Working capital decisions generally relate to which time horizon?Read the answer and worked solution →Short-term working capital decisions are based mainly on what?Read the answer and worked solution →The CCC counts days from which outlay to which receipt?Read the answer and worked solution →What does management generally aim for in the cash conversion cycle?Read the answer and worked solution →Which is the most useful profitability measure for working capital decisions?Read the answer and worked solution →Return on capital divides relevant 12-month income by which amount?Read the answer and worked solution →Firm value is enhanced when return on capital (ROC) does what?Read the answer and worked solution →Which policy of the firm directly affects its cash conversion cycle?Read the answer and worked solution →What is the aim of cash management in working capital?Read the answer and worked solution →Inventory management seeks a stock level that ensures what?Read the answer and worked solution →Debtors management seeks credit terms that do what?Read the answer and worked solution →Ideally, what should finance a firm's inventory?Read the answer and worked solution →Which arrangement turns a firm's debtors into cash?Read the answer and worked solution →What does the cash conversion cycle measure?Read the answer and worked solution →Which practice can give a firm a negative cash conversion cycle?Read the answer and worked solution →The cash conversion cycle runs between which two events?Read the answer and worked solution →The operating cycle equals the sum of which two periods?Read the answer and worked solution →

Worked practice questions

How is net working capital calculated?

  1. Fixed assets minus long-term debt
  2. Sales minus cost of goods sold
  3. Current assets plus current liabilities
  4. Current assets minus current liabilities
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Correct answer: D. Current assets minus current liabilities

Working capital is the excess of current assets over current liabilities, so it is their difference.

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Gross working capital is equal to which item?

  1. Owners' equity funds
  2. Current liabilities
  3. Total current assets
  4. Net fixed assets
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Correct answer: C. Total current assets

Gross working capital is the total of current assets before any liabilities are deducted.

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Current assets below current liabilities means the firm has what?

  1. A negative cost of capital
  2. A working capital surplus
  3. A positive operating cycle
  4. A working capital deficiency
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Correct answer: D. A working capital deficiency

When current assets fall short of current liabilities the gap is a working capital deficiency or deficit.

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More Financial Management topics

Sources of FinanceCost of Capital BasicsLeverage (Finance)Capital Structure BasicsDividend BasicsCapital Budgeting BasicsDividend PoliciesFinancial Management