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Questions and Answers
What is the primary purpose of working capital management?
What is the primary purpose of working capital management?
- To maximize long-term investments
- To ensure sufficient cash flow for short-term operating costs and debt obligations (correct)
- To eliminate current liabilities
- To minimize current assets
What is the formula for net working capital?
What is the formula for net working capital?
- Operating CA – Operating CL
- Total current assets
- Cash + Inv. + A/R - Accruals + A/P
- Current assets - Current liabilities (correct)
What does the working capital cycle (operating cycle) include?
What does the working capital cycle (operating cycle) include?
- Accounts Payable and Work in progress
- Raw Materials and Cash
- Sales and Value Addition
- Accounts Receivable and Finished Goods (correct)
What does working capital policy involve?
What does working capital policy involve?
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What is the purpose of net operating working capital (NOWC)?
What is the purpose of net operating working capital (NOWC)?
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What is the formula for net operating working capital (NOWC)?
What is the formula for net operating working capital (NOWC)?
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What does working capital management primarily focus on?
What does working capital management primarily focus on?
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What does the working capital cycle (operating cycle) include?
What does the working capital cycle (operating cycle) include?
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What is the primary purpose of maintaining sufficient cash flow in working capital management?
What is the primary purpose of maintaining sufficient cash flow in working capital management?
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What does the term 'working capital policy' involve?
What does the term 'working capital policy' involve?
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