Working Capital Management Quiz
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Questions and Answers

What does the Debt Coverage Ratio measure in financial management?

  • Profitability
  • Debt repayment capability (correct)
  • Liquidity
  • Efficiency
  • Which financial ratio is used to evaluate a company's ability to pay off its short-term obligations?

  • Inventory Turnover Ratio
  • Operating Cash Flow Ratio
  • Debt-to-Equity Ratio
  • Quick Ratio (correct)
  • What is the primary focus of the Debt-to-Equity Ratio?

  • Profitability
  • Solvency (correct)
  • Liquidity
  • Efficiency
  • In working capital management, what does the Inventory Turnover Ratio indicate?

    <p>Sales efficiency</p> Signup and view all the answers

    What does the Operating Cash Flow Ratio measure in financial analysis?

    <p>Operating efficiency</p> Signup and view all the answers

    Which financial metric is used to assess the efficiency of a company in collecting receivables?

    <p>Days Sales Outstanding (DSO)</p> Signup and view all the answers

    The formula for calculating the Cash Conversion Cycle involves which components?

    <p>(DSO + DIO) - DPO</p> Signup and view all the answers

    What does the Quick Ratio primarily assess in a company's financial health?

    <p>Short-term liquidity</p> Signup and view all the answers

    When calculating Working Capital, what does a negative value typically indicate?

    <p>'Inadequate' liquid assets to cover obligations</p> Signup and view all the answers

    What does the Inventory Turnover Ratio reveal about a company's operations?

    <p>Efficiency in managing inventory levels</p> Signup and view all the answers

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