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US CMA Part 2 Working Capital Management — practice questions

Explore 23 free Working Capital Management questions in US CMA Part 2 Finance. Open each question or exercise to read its content, reference answers and available explanation.

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Working Capital Management questions and exercises with answers

Showing questions 1–23 of 23.

Gross working capital is equivalent to which balance sheet total?Read the answer and worked solution →Working capital is usually spoken about in how many versions?Read the answer and worked solution →Trade credit is granted to creditworthy companies by their:Read the answer and worked solution →Under the common term Net 30, payment is due in full within:Read the answer and worked solution →Working capital management is said to reduce the risk of:Read the answer and worked solution →Which three liquidity ratios are brought into this discussion?Read the answer and worked solution →Net working capital is current assets less which figure?Read the answer and worked solution →With $1,000,000 of current assets and $750,000 of current liabilities, net working capital is:Read the answer and worked solution →Negative net working capital means the current liabilities are:Read the answer and worked solution →The quick ratio is more conservative than the current ratio because it leaves out:Read the answer and worked solution →The inventory conversion period goes by which other name?Read the answer and worked solution →Before inventory can become cash, it must first be:Read the answer and worked solution →A company with a liberal credit policy requires working capital in what amount?Read the answer and worked solution →With $2,000,000 of current assets and $1,000,000 of current liabilities, the current ratio is:Read the answer and worked solution →A current ratio of two to one means current liabilities could be satisfied how many times?Read the answer and worked solution →Why can an excessively high net working capital be a problem?Read the answer and worked solution →Supplies and prepaid expenses are described as never becoming which of these?Read the answer and worked solution →Which production technique is named as affecting the inventory conversion cycle?Read the answer and worked solution →Build the net working capitalRead the answer and worked solution →Liquid or notRead the answer and worked solution →Pick it fastRead the answer and worked solution →Flip and match the termsRead the answer and worked solution →Working capital bingoRead the answer and worked solution →

Worked practice questions

Gross working capital is equivalent to which balance sheet total?

  1. Current assets
  2. Current auditors
  3. Constant assets
  4. Contract assets
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Correct answer: A. Current assets

1. Working capital is described in two versions. 2. The gross version is the simpler of the two. 3. Current assets are synonymous with the term gross working capital. 4. So the answer is current assets. _Source: OpenStax Principles of Finance (CC BY 4.0), Ch 19 'The Importance of Trade Credit and Working Capital in Planning', sections 19.1-19.5_

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Working capital is usually spoken about in how many versions?

  1. Nine versions
  2. Two versions
  3. Ten versions
  4. Six versions
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Correct answer: B. Two versions

1. One version counts only what the company owns in the short term. 2. The other subtracts what it owes in the short term. 3. Working capital is often spoken about in two versions. 4. They are gross working capital and net working capital. _Source: OpenStax Principles of Finance (CC BY 4.0), Ch 19 'The Importance of Trade Credit and Working Capital in Planning', sections 19.1-19.5_

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Trade credit is granted to creditworthy companies by their:

  1. Vendors
  2. Voters
  3. Valets
  4. Violins
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Correct answer: A. Vendors

1. Trade credit arises when a company buys before it pays. 2. The party extending it is the one supplying the goods. 3. Trade credit is granted by vendors to creditworthy companies. 4. It covers purchases of materials, inventory and services. _Source: OpenStax Principles of Finance (CC BY 4.0), Ch 19 'The Importance of Trade Credit and Working Capital in Planning', sections 19.1-19.5_

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