CCM Working Capital Management Flashcards
6 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CCM Working Capital Management flashcards as text
Supply chain finance (SCF) primarily benefits which party?
Answer: Both buyer and supplier
Supply chain finance benefits buyers (who can extend payment terms) and suppliers (who receive early payment at favorable financing rates through the buyer's credit standing).
Which working capital KPI best measures the efficiency of inventory management?
Answer: Inventory Turnover Ratio
The inventory turnover ratio measures how many times a company sells and replaces its inventory in a period, directly reflecting inventory management efficiency.
A lockbox system is primarily implemented to improve:
Answer: Accounts receivable collection speed
A lockbox system directs customer payments to a bank-operated post office box, accelerating check processing and reducing mail and deposit float.
In working capital management, 'float' refers to:
Answer: The time delay between payment initiation and actual fund transfer
Float is the delay between initiating a payment and when funds actually transfer, which cash managers can exploit to maximize investable balances.
Which ratio measures a company's ability to pay short-term obligations using only cash and cash equivalents?
Answer: Cash ratio
The cash ratio divides cash and cash equivalents by current liabilities and is the most conservative liquidity measure, excluding both inventory and receivables.
Factoring as a working capital solution involves:
Answer: Selling accounts receivable to a third party at a discount
Factoring involves selling accounts receivable to a factor at a discount in exchange for immediate cash, converting receivables into liquidity without waiting for customer payment.