Fundamentals of Financial Management, Third Edition

OBJECTIVE-TYPE QUESTIONS

1. Mark true or false.
   1. Net working capital means current liabilities.
   2. Gross working capital means total current assets.
   3. In public utility services like an electricity distribution company, the ratio of current assets to fixed assets is large.
   4. The more liberal the terms of credit offered to the customers, the shorter is the operating cycle.
   5. An aggressive approach to current asset financing is to finance a part of the variable current assets with long-term funds.
   6. Liquidity rises with an increase in the size of the current assets.
2. Choose the most suitable answer.
   1. Net working capital means:
      1. current assets + current liabilities
      2. current assets − current liabilities
      3. current assets only
   2. Operating cycle includes:
      1. inventory ...