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8.-
What is the meaning of current liabilities in Working Capital Management?
A) Source of financing of its current assets.
B) Source of financing of its fixed assets
C) Source of financing of
D) Source of financing of its long-term liabilities.
(Choose one option)
Step by step
Solved in 2 steps
- Under the capital maintenance concept, which of the following items should be deducted from the increase or decrease in capital? a. Losses on hedging instruments in a cash flow hedge. b. Increase in revaluation surplus. c. Actuarial loss on remeasurement on defined benefit liability. d. Reacquisition of treasury shares.1- Discuss the concept of an optimal capital structure? 2- Distinguish between business and financial risk?Which of the following is NOT a capital component when calculating the weighted average cost of capital (WACC) for use in capital budgeting? a. Accounts payable. b. Preferred stock. c. Common stock raised by new issues. d. Long-term debt. e. Common stock "raised" by reinvesting earnings.
- Which of the following statements are correct? Preferred equities are separate form common equities Opportunity cost should not be included in the capital budgeting decision Retained earnings are important in calculating the WACC Weights for equity in the WACC calculation are always on book values Cash from net working capital for each year is defined as NWCn- NWCn-11. Explain the profitability-risk trade-off of alternative levels of working capital balances. 2. Explain the profitability-risk trade-off of alternative methods of financing a given working capital investment. 3. Discuss the profitability versus risk trade-offs associated with alternative levels of working capital investment. 4. A. which of the following working capital financing policies subjects the firm to a greater risk?i. Financing permanent current assets with short-term debtii. Financing fluctuating current assets with long-term debtB. Which policy will produce the higher expected profitability?Which of the following is the correct statement about the inflation figure that is included in the money cost of capital? a. It is expected general inflation suffered by the investors b. It is historic general inflation suffered by the investors c. It is historic and specific to the business d. It is expected and specific to the business
- Explain how the financing of working capital can be arranged in terms of short and long term sources of finance. In particular, make reference to: i) The financing of working capital or net current assets when short term sources of finance are exhausted ii) The distinction between fluctuating and permanent current assets.Which of the following statement is correct Select one: A . The capital structure of a company may comprise of Equity Share Capital, Preference Share Capital and Debentutes B . Capital structure is a method of analyzing and comparing substantial future investments and expenditures to determine which ones are most worthwhile C . working capital referring to the mix of different sources of long - term funds D .Capital expenditure decisions do not involve commitment of large sums of money E .None of the statement is correctThe working capital financing policy that would put a company to the highest level of risk is the one where the company finances a. permanent current assets with short-term liabilities b. temporary current assets with short-term liabilities c. permanent current assets with long-term liabilities d. temporary current assets with long-term liabilities
- Which of the following is not a long term source of capital? a. Preferred stock b. Common stock c. Current liabilities. d. Long-term debtThere are two concepts in respect of working capital Select one: a. None of the options b. Cost of preferred stocks and cost of loans c. Preference share capital and long term assets d. Gross working capital and net working capital e. Cost of bonds and cost of preferred stocksDetermining optimum capital structure is a. An investment decision b. A financing decision c. A dividend decision d. liquidity decision
