Working Capital
Management Practice
Exam 2026-VERSION
WITH QUESTIONS AND
ANSWERS 100%
CORRECT WITH
RATIONALES AND PDF
DOWNLOAD.
1. Working capital is defined as:
,A. Fixed assets minus liabilities
B. Total assets minus equity
C. Current assets minus current
liabilities
D. Long-term assets minus long-term
liabilities
Working capital measures short-term
liquidity by comparing current assets to
current liabilities.
2. A firm’s liquidity is best measured by:
A. Debt ratio
B. Current ratio
C. Inventory turnover
D. Return on assets
,The current ratio evaluates the ability to
meet short-term obligations.
3. The quick ratio excludes:
A. Cash
B. Accounts receivable
C. Marketable securities
D. Inventory
Inventory is the least liquid current asset.
4. Cash conversion cycle measures:
A. Profitability cycle
B. Time between cash outflow and
inflow
, C. Debt repayment period
D. Asset replacement cycle
It tracks how long cash is tied up in
operations.
5. A shorter cash conversion cycle
indicates:
A. Poor liquidity
B. Higher inventory
C. Better liquidity management
D. Higher leverage
Firms recover cash faster, improving
liquidity.
Management Practice
Exam 2026-VERSION
WITH QUESTIONS AND
ANSWERS 100%
CORRECT WITH
RATIONALES AND PDF
DOWNLOAD.
1. Working capital is defined as:
,A. Fixed assets minus liabilities
B. Total assets minus equity
C. Current assets minus current
liabilities
D. Long-term assets minus long-term
liabilities
Working capital measures short-term
liquidity by comparing current assets to
current liabilities.
2. A firm’s liquidity is best measured by:
A. Debt ratio
B. Current ratio
C. Inventory turnover
D. Return on assets
,The current ratio evaluates the ability to
meet short-term obligations.
3. The quick ratio excludes:
A. Cash
B. Accounts receivable
C. Marketable securities
D. Inventory
Inventory is the least liquid current asset.
4. Cash conversion cycle measures:
A. Profitability cycle
B. Time between cash outflow and
inflow
, C. Debt repayment period
D. Asset replacement cycle
It tracks how long cash is tied up in
operations.
5. A shorter cash conversion cycle
indicates:
A. Poor liquidity
B. Higher inventory
C. Better liquidity management
D. Higher leverage
Firms recover cash faster, improving
liquidity.
