Finance for Non-Finance Managers Working Capital Management 2

Question 1

What does accounts payable represent on a balance sheet?

Accepted Answer

Money the company owes to suppliers

Answer

Money owed to the company by customers

Answer

Cash held in reserve

Answer

Revenue earned but not yet billed

Question 2

Inventory turnover ratio measures:

Accepted Answer

How many times inventory is sold and replaced in a period

Answer

The percentage of revenue tied up in inventory

Answer

The cost of storing inventory per unit

Answer

How long inventory sits before it is ordered

Question 3

Which term describes money owed by customers for goods or services already delivered?

Accepted Answer

Accounts receivable

Answer

Accounts payable

Answer

Notes payable

Answer

Deferred revenue

Question 4

A high days sales outstanding (DSO) typically indicates:

Accepted Answer

The company is collecting receivables slowly

Answer

Customers are paying very quickly

Answer

Inventory is selling faster than expected

Answer

Supplier payment terms have improved

Question 5

Which of the following is a current liability?

Accepted Answer

Accrued wages payable

Answer

Patent

Answer

Mortgage payable (10-year)

Answer

Goodwill

Question 6

Just-in-time (JIT) inventory management primarily aims to:

Accepted Answer

Reduce inventory levels to lower holding costs

Answer

Maximize inventory on hand to avoid stockouts

Answer

Increase supplier payment terms

Answer

Speed up depreciation of assets