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Wednesday, September 26, 2018

ABM UNIT 28 : Working Capital Finance


Discussion 25.09.2018


1. Net Working Capital (N W C) means …
The choices are:
            (a) Total current assets minus bank finance
            (b) Total current assets minus credit from suppliers
            (c) Total current assets minus total current liabilities
            (d) Short term sources brought in by the promoters
The correct choice is: (c) Total current assets minus total current liabilities

2. Which of the following statements is not true for efficient inventory management?
 The choices are:
          (a) It results in reduction in inventory
          (b) It reduces the working capital requirements of the enterprise
          (c) It reduces the N W C available with the enterprise
          (d) It increases the Inventory Turnover Ratio if the level of sales remains same.
The correct choice is: (c) It reduces the N W C available with the enterprise

3. Which of the following is not a source for meeting working capital requirements?
The choices are:
(a) Suppliers' credit
(b) Bank finance
(c) Other current liabilities
(d) Advance payment to suppliers
The correct choice is: (d) Advance payment to suppliers

(4) Which of the following is a liquidity ratio?
The choices are:
(a) Quick ratio
(b) T O L / T N W
(c) D S C R
(d) Other current liabilities
The correct choice is: (a) Quick ratio

(5) Which of the following is not correct regarding Current Ratio?
The choices are:
(a) For same level of current assets, increase in N W C results in increased current ratio.
(b) The current ratio can be less than one
(c) The current ratio can be negative
(d) Current ratio is an indicator of liquidity
The correct choice is: (c) The current ratio can be negative

(6) The commercial paper can be issued by
The choices are:
(a) Corporates
(b) Corporates and partnership firms
(c) Any business entity
(d) None of the above
The correct choice is: (a) Corporates

(7) Which of the following is not correct regarding Forfaiting? The choices are:
(a) It a form of working capital finance
(b) It is used in export finance
(c) It is with recourse to the drawer of the bill
(d) Under this financier discounts the bills drawn on buyer.
The correct choice is: (c) It is with recourse to the drawer of the bill.

(8) Which of the following is correct regarding Letters of  Credit. The choices are:
(a) These are opened by a bank for export sales by the client
(b) These are opened by a bank for local sales by the client
(c) Letters of Credit do not carry much risk for the opening bank
(d) Letters of Credit are opened by a bank for purchase of goods by the client
The correct choice is: (d) Letters of Credit are opened by a bank for purchase of goods by the client.

(9) Under Turnover method of assessment, the limit is sanctioned at per cent of the projected turnover. The choices are:
(a) 25    (b) 20    (c) 30     (d) 35
The correct choice is: (b) 20

(10) Cash budget method of assessment is more suitable for those business enterprises which have ….  The choices are:
(a) uniform level of operations
(b) High level of operations
(c) Low level of operations
(d) Seasonal operations
The correct choice is: (d) Seasonal operations.

11. What are the methods for bank finance??
Ans- Holding Norms based method , Cash Budget method,Turnover method of assessment

12. Gross working capital?

13. Sohini:What r the 3 methods for calculating bank finance according to tandon committee?
Ans- Holding Norms based method , Cash Budget method,Turnover method of assessment

14. Roselin:Total requirement of current asset

15. SELVARAJ T: Net working capital?
Ans- amt arranged by long term funds

16. Meenakshi : Ssi units have working capital limits upto ...
Ans- : It is 7 crores as per recent changes

17. Sohini: Which method is used for calculating bank finance for working capital limit upto 5crore to MSE??

18. Manish Kumar Sharma: Under projected turn-over method of Nayak committee,the working capital is-______
A.min 25% of the projected turnover
B.min 20% of projected turnover
C.15% of the projected turnover
D.5%of the projected turnover
Ans- a

19. Meenakshi:..... method is used for seasonal industries
Ans- Cash budget

20. Meenakshi: receivables are part of ..... assets
Ans- Current

21. Meenakshi: who willl sanction working capital limits?
bank
rbi
board of directors
Ans- Banks

22. Meenakshi: SFMS full form??
Ans- Structured financial messaging system

23. Meenakshi:value dating is used for what rsn??
board of directors will formulate the policies bt here ans is banks

24. Meenakshi:The conduct of lc business is governed by .....??
Ans- UCP 600

25. Meenakshi:...... is estimated by examining the sources of supply, means of transport,discount etc
Ans- eoq
economic order quality

Correct me for any mistake and share more questions.

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