FIN3702 - MCQ Test Bank

FIN3702 - MCQ Test Bank (2021) Principles of Managerial Finance, 12e (Gitman) Chapter 14 Working Capital and Current Assets Management Learning Goal 1: Understand short-term financial management, net working capital, and the related tradeoff between profitability and risk. 1) A firm that is unable to pay its bills as they come due is technically insolvent. Answer: TRUE Topic: Basics of Short-Term Financial Management Question Status: Previous Edition 2) Short-term financial management is concerned with management of the firm's current assets and current liabilities. Answer: TRUE Topic: Basics of Short-Term Financial Management Question Status: Previous Edition 3) The goal of short-term financial management is to manage each of the firm's current assets and current liabilities in order to achieve a balance between profitability and risk that contributes to the firm's value. Answer: TRUE Topic: Basics of Short-Term Financial Management Question Status: Previous Edition 4) Working capital represents refers to a firm's long term capital. Answer: FALSE Topic: Working Capital Management Question Status: Previous Edition 5) In general, the greater a firm's current assets relative to its short-term obligations, the better able it will be to pay its bills as they come due. Answer: TRUE