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Theory Question On Working Capital

This document lists 31 theory questions related to working capital management. The questions cover topics such as just-in-time agreements, economic order quantity, cash surplus investment, overdraft financing, cash management models, cash operating cycles, working capital and business solvency, credit control departments, factoring, short-term and long-term financing of working capital, accounts receivable management, working capital funding policies, objectives of working capital management, working capital financing strategies, managing credit risk with foreign customers, working capital financing policies, primary objectives of working capital management, factors in trade receivables policies, relationships between cash operating cycles and working capital investment, factors influencing working capital policies, and determining optimum cash levels and trade receivables

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Nahian Mueid
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632 views2 pages

Theory Question On Working Capital

This document lists 31 theory questions related to working capital management. The questions cover topics such as just-in-time agreements, economic order quantity, cash surplus investment, overdraft financing, cash management models, cash operating cycles, working capital and business solvency, credit control departments, factoring, short-term and long-term financing of working capital, accounts receivable management, working capital funding policies, objectives of working capital management, working capital financing strategies, managing credit risk with foreign customers, working capital financing policies, primary objectives of working capital management, factors in trade receivables policies, relationships between cash operating cycles and working capital investment, factors influencing working capital policies, and determining optimum cash levels and trade receivables

Uploaded by

Nahian Mueid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Theory Question On Working Capital

13 JIT

Suggest the benefits PS Co might expect to derive from a JIT agreement in


addition to the benefits specified in the question.
(7 marks)

14 EOQ

Determine whether the new system is worthwhile in financial terms,


assuming that the EOQ is used under the existing system.

15 Thorne Co (FMC, 12/05, amended)

Discuss the factors to be considered by Thorne Co when planning ways to


invest any cash surplus forecast by its cash budgets. (5 marks)
Discuss the advantages and disadvantages to Thorne Co of using
overdraft finance to fund any cash shortages forecast by its cash budgets.
(5 marks)
Explain how the Baumol model can be employed to reduce the costs of
cash management and discuss whether the Baumol cash management
model may be of assistance to Thorne Co for this purpose.(5 marks)

16 Anjo Co

Explain cash operating cycle (working capital cycle) significance.

17 Joan Co

Discuss the relationship between working capital management and


business solvency, and explain the factors that influence the optimum cash
level for a business.
(7 marks)

18 Special Gift Suppliers (FMC, 12/01, amended)

As an adviser to Special Gift Suppliers Co, write a report to the financial


controller that outlines:
(a) How a credit control department might function
(b) The benefits of factoring
(c) 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. (15
marks)

19 Ulnad Co (Specimen paper 2007, amended)


explain the relevance of these values for the cash management of the company.

20 Danul Co (Specimen paper 2007, amended)

Identify and explain the key areas of accounts receivable management. (5


marks)

Discuss the key factors to be considered when formulating a working


capital funding policy. (5 marks)

21 PKA Co (12/07, amended)

Identify the objectives of working capital management and discuss the


conflict that may arise between them.
(3
marks)

22 HGR Co (6/09, amended)

Discuss the working capital financing strategy of HGR Co. (5 marks)

23 RGH Co (6/09, amended)

Discuss how risks arising from granting credit to foreign customers can be
managed and reduced.
(10
marks)

24 APX Co (12/09, amended)

Analyse and discuss the working capital financing policy of APX Co. (6
marks)

25 ZSE Co (6/10, amended)

Discuss whether profitability or liquidity is the primary objective of working


capital management. (5 marks)

26 WQZ Co (12/10, amended)

Discuss the factors that should be considered in formulating working


capital policy on the management of trade receivables.
(8 marks)

27 Bold Co (12/11, amended)

Explain the meaning of the term cash operating cycle and discuss the
relationship between the cash operating cycle and the level of investment
in working capital. Your answer should include a discussion of relevant
working capital policy and the nature of business operations. (6 marks)

29 ZPS Co (6/11,amended)

Discuss the factors that influence the formulation of working capital policy.
(8 marks)

31 PXK Co (12/12, amended)

Identify and discuss the factors to be considered in determining the


optimum level of cash to be held by a company. (5 marks)

Discuss the factors to be considered in formulating a trade receivables


management policy. (5 marks)

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