QUESTIONS AND ANSWERS 100

Working Capital Management EXAM

QUESTIONS AND ANSWERS 100%

SOLVED (Newest 2025) Classify the funds allocated to a concern - Correct Answers

✅*1. LT*

• Fixed investment
• A major part is invested in the fixed assets
• A major part = invested in the fixed assets

*2. ST*

• Used to run day-to-day operations

What are the two concepts of working capital? - Correct Answers ✅1. *Quantitative working capital*

• AKA *Gross concept*
• *Qualitative working capital*
• *AKA Net concept*

What is the Quantitative concept? - Correct Answers ✅a.AKA *Gross concept*

• The amount of working capital refers to the 'total of current

assets' ≈ Circulating capital 1 / 3

Working Capital Management EXAM

QUESTIONS AND ANSWERS 100%

SOLVED (Newest 2025) What is the qualitative concept? - Correct Answers ✅a.*AKA Net concept*

• Gives an idea regarding the source of financing capital
• Working capital = *the excess of current assets over

current liabilities* What is the working capital according to the qualitative concept? - Correct Answers ✅The excess of current assets over current liabilities What is the working capital according to the quantitative concept? - Correct Answers ✅The total of current assets

• J. Guthmann defined working capital as... - Correct

Answers ✅The portion of a firm's current assets = financed from LT funds Net-working capital - Correct Answers ✅Current assets - Current liabilities 2 / 3

Working Capital Management EXAM

QUESTIONS AND ANSWERS 100%

SOLVED (Newest 2025) What does *the net-working capital represent*? - Correct Answers ✅1. The amount of current assets = remain if all current liabilities = paid When is the *Gross concept* used? - Correct Answers ✅Objective = *To measure the size + extent to which current assets = being used* When is the *Net concept* used? - Correct Answers ✅*To evaluate the liquidity position of an undertaking* Define *Current assets* - Correct Answers ✅1. Short life span

• Engaged in the current operation of a business

3. Used for ST operations: < 12 months

4. *Important characteristics*:

• *Short life span*
• *Swift transformation* into other forms of assets
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