16 Questions
What aspect of the business does the Debt-to-Equity Ratio indicate in financial management?
Leverage
How is Working Capital calculated?
Current Assets - Current Liabilities
What does the Quick Ratio measure in working capital management?
Liquidity
Which formula represents the Inventory Turnover Ratio calculation?
Cost of Goods Sold / Average Inventory
What does DSO stand for in the context of working capital?
Days Sales Outstanding
Which formula is used to calculate the Operating Cash Flow Ratio?
Operating Cash Flow / Net Income
What is the correct formula for the Cash Conversion Cycle?
DSO + DIO - DPO
What is the primary focus of the Quick Ratio in working capital management?
Liquidity
In the formula for the Quick Ratio, what does 'Current Assets - Inventory' represent?
Current Assets
How is the Inventory Turnover Ratio calculated?
Cost of Goods Sold / Average Inventory
Which formula correctly represents the Cash Conversion Cycle calculation?
DSO + DIO - DPO
How is Working Capital typically calculated?
Current Liabilities - Current Assets
What does the Debt-to-Equity Ratio mainly indicate in financial management?
Leverage
In working capital analysis, which aspect does the Operating Cash Flow Ratio capture?
Operating Cash Flow / Current Liabilities
'Current Liabilities / (Current Assets - Inventory)' is used in which financial ratio calculation?
'Current Assets - Current Liabilities'
What does the Quick Ratio measure in working capital management?
Liquidity.
Study Notes
Working Capital Management
- The Quick Ratio measures liquidity in working capital management.
- The formula for the Quick Ratio is: (Current Assets - Inventory) / Current Liabilities.
Key Concepts
- DSO stands for Days Sales Outstanding.
- The Inventory Turnover Ratio is calculated as: Cost of Goods Sold / Average Inventory.
- The Cash Conversion Cycle is calculated as: DSO + DIO - DPO.
- Working Capital is calculated as: Current Assets - Current Liabilities.
Financial Management
- The Operating Cash Flow Ratio is calculated as: Operating Cash Flow / Current Liabilities.
- The Debt-to-Equity Ratio indicates leverage in financial management.
Test your knowledge of working capital management with this quiz covering topics such as Quick Ratio, formulas, and Days Sales Outstanding (DSO). See if you can identify what the Quick Ratio measures and calculate it correctly.
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