NPTEL Course Working Capital Management Assignment IIT QL. The major objective(s) of working capital management is/are: a) Optimum investment in current assets b) Adequate liquidity c) Marginal ROT in Current Assets should be more than cost of funds &) Allof the above Q2. With regard to trade-off between profitability and risk which one is true? a) Higher NWC > Less Risk > Low profitability b) Low NWC> Higher risk > Higher profitability ° Both ofthe above d) None of the above Q3. Risk in working capital management means: he probability that a firm will become technically solvent and pay its obligations as and when they become due for payment ©) The probability that a firm will become financially insolvent and won't be able to meet its obligations as and when they become due for payment 4) Allofthe above Q4. With regard to assumptions of working capital management which one is true? a) Working capital management is relevant to manufacturing firms b) The current assets are less profitable than fixed assets, c) Short term funds have less cost than long term funds 4) Q5. To study the effect of level of current assets on profitability and risk which ratio is normally calculated? a) Current assets to total assets ratio b)Current assets to fixed assets ratio ¢)Current assets to current liabilities ratio 4)None of the above Q6. The effect of increase of current assets normally would bea) Decline in profitability b) Risk of technical insolvency would decrease. °) 4) None of the above Q7.A decrease in the ratio of Current Assets to Total Assets will result in: a) Increased profitability as well as risk b) Decreased profitability as well as risk ©) Increased profitability but decreased risk 4) Decreased profitability but increased risk QB. The ratio used to study the effect of current liabilities on risk and profitability i a) Current liabilities to total assets ratio b) Current assets to total liabilities ratio ©) Current liabilities to total liabilities ratio 4) Current assets to current liabilities ratio Q9. The effect of increase in current liabilities to total assets Ratio would be: a) Profitability will increase b)Risk will increase ©)No effect Both a 8b QO. Approaches of Working capital management are: a) Conservative, Aggressive and Hedging b) Hedging and Conservative ©) Conservative and aggressive 4) All of the above QULAs per hedging approach of WCM, the level of Net working capital would normally be: a) Highest b) Lowest ©) Nil d) None of the above Q12.The major advantage of Conservative approach is: a) Itis less risky and the firm is able to absorb shocks b) The firm does not face frequent financing problems ©) Its riskier but smooth a)