Crowdly

a scenario where raw material prices are expected to rise significantly, how

can a company proactively manage its working capital?

Increase

accounts receivable collection efforts

Reduce

cash reserves to invest in advertising

Decrease

production rates

Secure

long-term supplier contracts to lock in prices

a company’s accounts payable period is longer than its accounts receivable

period, how should management assess this situation?

Efficient

supply chain management

Effective

cash flow management

Potential

liquidity issues

Overly

aggressive credit policy

Suppose

a company experiences a significant increase in sales. In order to optimize its

working capital management, which strategy should it prioritize?

Decrease

production to limit inventory buildup

Increase

payment terms with suppliers

Implement

a stricter credit policy

Retain

a larger cash balance

When

analyzing the impact of a policy change regarding accounts receivable, which

key metric should a financial manager prioritize to measure success?

Return

on equity

Return

on investment (ROI)

Days

sales outstanding (DSO)

Gross

profit margin

a firm has a current ratio of 1.2, which of the following scenarios would

indicate a potential liquidity problem?

Increasing

sales while maintaining the same cost structure

Maintaining

an average inventory turnover rate

Increasing

short-term loans to finance operations

Reducing

accounts payable terms

company is evaluating its current working capital ratio of 1.5. If it aims to

improve this to 2.0, which of the following changes would be most effective?

Decreasing

current liabilities by

N$300 000

Increasing

inventory by

N$100 000

Increasing

current assets by

N$200 000

Decreasing

cash reserves by

N$50 000

Which

of the following actions would most effectively improve a company's liquidity

position in working capital management?

Reducing

inventory levels

✅

Investing

excess cash in long-term assets

Increasing

accounts receivable days

Extending

accounts payable periods

Which

capital budgeting technique is most effective for evaluating projects with

different lifespans?

Payback

Period

Profitability

Index

Adjusted

Present Value

Equivalent

Annual Annuity

✅

the NPV of a project is negative, what should be the recommended action based

on capital budgeting principles?

Reject

the project outright

✅

Delay

the decision until more information is available

Continue

the project with adjustments

the project as it may yield future benefits