(D) All of the above Sundry debtors = ? Current Assets = 960 Lakhs; Current Liabilities = 360 Lakhs (D) Carrying excess inventories (D) the company is able to pay-off its short-term liabilities. It might indicate that the business has too much inventory or is not investing its excess cash. (B) Aggressive current assets policy A firm's permanent working capital refers to the: Portion of net working capital that is financed from long-term sources What happens to a firms whose uses of cash exceed its sources of cash during an accounting period? (C) Cost of Goods Sold amounts that must be held to meet debt covenants. Gross profit for the year ended amounts to 5,00,000. Wages are paid for 1st and 2nd week in the 3rd week & for 3rd and 4th week in the next week. (D) Cant say Operating cost = ? (B) How many time account receivable is collected What Does Low Working Capital Say About a Company's Financial Prospects? From the following data calculate finished goods conversion period for the years 2019 & 2020. Debt collection period 45 days Answer: Answer: (C) 75,75,000 (D) the company is able to pay-off its short-term liabilities. Dont get it twisted, permanent working capital is something any/every successful business owner is aware of. (B) 43 days (C) receivable, gross profit and inventory Projected annual sales 65 lakhs (B) 76,55,750 C. portion of net working capital that is financed from long-term sources. (A) 29 days It is computed by deducting CL(current liabilities) from CA(current assets). (C) 3,76,000 If current assets are 1,09,05,750 and current liabilities are 32,50,000 then maximum permissible bank finance as per first method of Tandon Committee norms is Cash monitoring is needed by both individuals and businesses for financial stability. | Best Courses & High Paying Jobs after Bachelor of Arts, MCQ Questions for Class 9 Science with Answers PDF Download Chapter Wise, Stopping By Woods On A Snowy Evening Poem Summary in English and Hindi by Robert Frost, Receivable Management Financial Management MCQ, Indian Woman Essay In Hindi, Old Man at the Bridge Summary Analysis and Explanation by Ernest Hemingway, Paragraph On Happiest Day Of My Life: A Personal Experience, Diary Entry for Class 10 CBSE Format, Topics, Examples, Samples, Landscape of The Soul Summary in English by Nathalie Trouveroy. (C) Stock Current assets 92,75,000 Current Assets are compared with: You borrow $200,000. (C) mode of overdraft, cash credit, public deposits etc. Sales during the year was 13,00,000 and gross profit ratio was 25% on sales. Answer: In fact, there are several kinds of working capital that a small business owner should know about, including: If youre still not entirely clear on what the differences are between permanent and temporary working capital, keep reading. (D) 4,51,370 Creditors + Bifis Payable Account Payable (B) 4,95,00,000 Course Hero is not sponsored or endorsed by any college or university. (A) 4,81,250 the minimum amount of working capital needed to maintain a cashflow; enough money to purchase materials, produce inventory, turn that inventory into profits, use those profits to purchase more materials, and so on. Creditors payment period = ? Prepaid expenses 37,500 Current liabilities: 3,73,750 = 12,89,625, Question 150. (D) none of the above Question 64. (B) [75% of (Core Current Assets Current Assets)] Current Liabilities Answer: (D) Permanent current assets should be financed with permanent working capital. Annual operating cost including depreciation of 2,10,000 was 21,00,000. (B) 45,000 Minimum difference between current assets and current liabilities C. Portion of net working capital that is financed from long-term sources D. Amounts that must be held to meet debt covenants B. If the interest rate is 7.5% p.a., what is the loan outstanding at the end of the first year? (B) 6,90,000 (A) 5,40,000 (C) 31,250 58,12,500 + 0.2.x = x If a companys current assets do not exceed its current liabilities, then it may have trouble growing or paying back creditors. (C) 19 days Answer: (D) Both ratios are expressed in number of times receivables are collected per year This problem has been solved! (B) (1) & (3) (3) Credit policy A similar financial metric called the quick ratio measures a ratio of current assets to current liabilities. (B) Long term working capital As the result, net working capital indicates the financing needs of a firm, both through long-term and short-term financing sources. Answer: (C) [75% of (Current Assets Core Current Assets)] Current Liabilities = [0.75 (960 60)] 360 Receive an answer explained step-by-step. Answer: (B) Net working capital. (C) Fixed working capital (C) 7.76 5.5.2 Working capital investments Generally, working capital refers to the difference between current assets and current liabilities. [1 Year =360 days] Well, consider the fact that permanent working capital actually, The precise value of your businesss fixed working capital will be relative to the size of your business, as well as the value of your current assets and your current liabilities. Answer: (A) Liquidity, Question 39. Working Capital Leverage. Answer: (A) 28,750, Tamilnadu Board Class 10 English Solutions, Tamilnadu Board Class 9 Science Solutions, Tamilnadu Board Class 9 Social Science Solutions, Tamilnadu Board Class 9 English Solutions, CS Executive Financial and Strategic Management MCQ, A Triumph of Surgery Extra Questions and Answers Class 10 English Footprints Without Feet, Notice Writing Class 11 Format, Examples, Topics, Exercises, Electricity Class 10 Extra Questions with Answers Science Chapter 12, A Roadside Stand Poem Summary line by line explanation in English by Robert Frost, Courses after BA | After BA What I Can do? In mergers or very fast-paced companies, agreements can be missed or invoices can be processed incorrectly. (iii) Reduction in credit period given to customers. Working Capital Ratio: What Is Considered a Good Ratio? Question 27. 51. 11,96,188 = 0.75x -3,73,750 (C) Variable (B) 1.52 Initial Working Capital - Answer: (C) All the raw material, Semi-finished and the finished goods in the organization, Question 62. (A) 28,246 (B) Current assets & current liabilities, Question 70. (B) 360 lakhs Note: 1 Year 365 days (A) operational and servicing (A) Depleting its inventories Expected production and sales are 48,000 units and 35,000 units respectively. (C) 13.33 Working capital is considered an internal funding resource that provides liquidity to firms to fund their short-term obligations (Aktas et al., 2015; Deloof, 2003; Yazdanfar & hman, 2014 ). This means the company does not have enough resources in the short-term to pay off its debts, and it must get creative on finding a way to make sure it can pay its short-term bills on time. (B) 49,29,313 Stock carrying (in terms of 8 weeks cost of sales requirement) Equity share capital 18,00,000 (B) Working capital increases as compared to last year, Question 91. (A) Trade-off between profitability and risk. Creditors 4 weeks \(\left(4,20,000 \times \frac{4}{52}\right)\) = 32308, Question 138. 3,15,000 = 7,20,000 0.75x 3,60,000 (D) 35 days & 25 days (A) 60,000 (C) Core current liabilities (A) Fixed Assets (i) Reduction of manufacturing cycle. Question 57. (D) 1,92,50,000 (D) Any of the above We also reference original research from other reputable publishers where appropriate. Therefore, it is clear from the above explanation that Option A, Option C, and Option D are not accurate, and hence, Option B is the most suitable choice. Question 59. Lending Express is excited to announce a new partnership with Seek Business Capital. Current liabilities include accounts payable, wages, taxes payable, and the current portion of long-term debt thats due within one year. x = Current liabilities = 10,00,000, Question 109. A firm's permanent working capital refers to the: portion of net working capital that is financed from long-term sources. (B) How many time account receivable is collected, Question 78. Last, working capital assumes all debt obligations are known. Accounts receivable are analyzed by (B) Reserve Margin Working Capital Stock of WIP = 72,000 2,50,000 + Cost of production/purchase 3,75,000 = 9,75,000 The current ratio is a liquidity ratio that measures a companys ability to cover its short-term obligations with its current assets. Question 82. (C) 32,308 (C) Both Statement I and Statement II are correct. Fluctuating Working Capital is also called as (A) Gross Working Capital (B) Cost of Production Current assets = ? Weve defined what fixed working capital is in a general sense, but there are two more specific sub-types of permanent working capital: The most basic definition of working capital is a businesss current assets less its current liabilities. (D) 10,20,000 Three alternative current assets policies are under consideration 40%, 50% and 60% of projected sales. Fixed assets 32,00,000 Difference between current assets and current liabilities, B. (A) higher liquidity and poor risk Gross working capital is the sum of a company's current assets, which are convertible to cash and used to fund daily business activity. (A) 18,000, Question 106. (D) None of the above Answer: Which of the following method is not used for calculating working capital cycle? Thus, the working capital equation is defined as the difference between current assets and current liabilities. For example, imagine a company whose current assets are 100% in accounts receivable. x = Accounts Payable = 3,36,667 (B) 61 days Permanent Working Capital. (A) Liquidity At the end of 2021, Microsoft (MSFT) reported $174.2 billion of current assets. (D) Current assets less current liabilities, Question 4. Answer: is revolutionizing the business lending process, making it faster and easier than ever to get matched with the optimal lender. (D) 425 lakhs (D) All of the above, Question 24. Outstanding Overheads = Total Overheads = \(\times \frac{\text { Lag in payment of overheads }}{360}\) For instance, if a company has current assets of $100,000 and current liabilities of $80,000, then its working capital would be $20,000. (D) (B) & (C) is correct. Answer: (A) total assets minus fixed assets. Answer: Managing working capital has a significant impact on the financial performance of firms. C) corporate tax rate approaches 100%. Financing a long-lived asset with short-term financing would be Plainly put, permanent working capital is the minimum amount of working capital that is needed for a business to cover all current liabilities and also continue operating. (C) an example of high risk high (potential) profitability asset financing. Operating cycles period equals: In order to receive the full article please mark the checkbox. 5. Which of the following working capital strategies is the most aggressive? Closing balance of debtors are 9,468. Maximum permissible bank finance as per Tandon Committee norms: (D) Inventory days Cash sales = 5,00,000 The author accepts no responsibility for any consequences whatsoever arising from the use of such information. (C) the average number of days it takes to collect an account. x Current Assets = 4,95,00,000, Question 133. It is not fixed at any rate. (A) inventory and receivables (D) 77,55,650 (B) Profitability Ratios Gross working capital refers to the firm's investment in current assets. High working capital isnt always a good thing. Answer: Answer: (C) Sell common stock to reduce current liabilities In other words, it represents the current assets required on a continuing basis over an entire year . By only looking at immediate debts and offsetting them with the most liquid of assets, a company can better understand what sort of liquidity it has in the near future. In valuation, the focus is on noncash working capital. Credit allowed to debtors 10 weeks Answer: Opening and closing stock of SVK Ltd. is 1,20,000 & 1,80,000 respectively. (D) In most industries, a current ratio of 2.0 is considered adequate. The management is of the opinion to make 20% margin for contingencies on net working capital. Effective management of working capital improves a firm's overall return on . Answer: (A) 24,00,000 (D) 1,10,00,726 It is stated in the problem that rate of gross profit is 2096 and export sales price 1096 below domestic price. A lower current assets/fixed assets ratio means (C) 16,000 (B) 18 days (C) the company has negative earnings before interest and tax (B) 37,80,000, Question 117. Purchases = 4,20,000 No. (C) Trade-off between equity and debt. Current assets are economic benefits that the company expects to receive within the next 12 months. Question 58. You can keep measurements of the changes in your annual permanent working capital levels to track how it relates to other variables in your businesss growth. (D) 28,462 Liquid Ratio = ? Select the correct answer from the options given below. (B) Liquidity ratio (A) 35,00,000 (A) 450 1akhs (B) 94 days C. portion of net working capital that is financed from long-term sources. What happens to a firm whose uses of cash exceed its sources of cash during an accounting period? Both figures can found in the publicly disclosed financial statements for public companies, though this information may not be readily available for private companies. 3,18,75,000 = 75% of (Current Assets Current Liabilities) Another way to review this example is by comparing working capital to current assets or current liabilities. In theory, a business could become bankrupt even if it is profitable. (B) A higher current ratio is always preferred to a lower current ratio. (A) 72 days Quick Ratio Formula With Examples, Pros and Cons, Understanding Liquidity and How to Measure It, Gross Working Capital: Definition, Calculation, Example, Vs. Net. Short-term assets financed with equity. (C) 5,65,000 Creditors payment period 60 days Now do that for each month. (D) Working capital cycle, Question 23. It might even go bankrupt. 1,20,000 + Purchases 1,80,000 = 3,60.000 Fixed assets are 6,00,000 and the firm plans to maintain a 50% debt-to-assets ratio. (B) 2 (two), Question 51. Opening stock = 9,90,000 (C) the company is unable to meet its short-term liabilities. (B) includes fixed assets. What is the expected return on equity if company follows ModeratePolicy} B) firm uses a debt-equity ratio of 1.0. Bills payable = 25,000 Creditors Payment Period = ? Answer: (B) Regression analysis method Answer: Gross working capital refers to Working Capital is the amount of funds necessary to cover the cost of operating the enterprises. for purchasing raw material and supplies, payment of wages, salaries and other sundry expenses. C. 55.625 = 151.875 x (C) 3,30,367 What are the aspects of working capital management? Method 2: 75% of Current Assets Current Liabilities = (0.75 1,09,05,750) 32,50,000 Answer: Answer: (B) (1) and (2) only Fuel, intact tires, and oil are all required. Answer: (D) an example of the hedging approach to financing. Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom. (D) 5,20,000 Raw material storage period 55 days Question 46. Examples of current liabilities include accounts payable, short-term debt payments, or the current portion of deferred revenue. (A) 62,500 (D) Variable working capital, Question 22. Number of drums = \(\frac{1,00,000 \text { tone }}{200 \mathrm{~kg} \text { i.e. } (B) 42,12,000 (D) All of the above. Answer: Alternatively, retail companies that interact with thousands of customers a day can often raise short-term funds much faster and require lower working capital requirements. (330) O A. Decrease in current assets means C. portion of net working capital that is financed from long-term sources. Answer: (C) 32,308 Permanent Working Capital is also known as I. (D) All of the above, Question 11. (A) Depreciation (D) Credit period Answer: Answer: (D) refers to the difference between current asset and Current liabilities. Current assets are likely to decline by 20%over the existing level Question 47. (A) 4,25,00,000 (A) Which can be sold by the companies. Tandon Committee Report on Working Capital relates to norms for . (B) If a company increases its current liabilities by 1,000 and simultaneously increases its inventories by 1,000, its quick ratio must fall. (C) 19,215 (1) Nature and size of business (B) 9,90,000 of operating cycle in a year = 4.5 (B) the firms investment in current assets. Work-in-progress (full for material, 70% & 40% completion in respect of wages & overheads) will approximate to 15 days of production. Question 19. (D) All of the above (A) 2,40,000 (B) Accounts receivable days (C) 2,63,127 (A) I (C) 148 days, Question 98. Answer: (B) 2,80,000 Its true, fixed working capital will change as your business grows. (B) Issue long-term debt to buy inventory Answer: Understanding Coca-Cola's Capital Structure (KO). D. amounts that must be held to meet debt covenants. Raw materials are in stock on average two month and Materials are in process, on average half month. (B) 49,29,313 The interest rate is 10% on all debts. Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. Avatar Corp solves its cash shortage by paying its bills a week late but loses a 1% discount by doing so. x = Account Receivable = 6,25,000 Even a profitable business may fail if it does not have adequate cash flow to meet its liabilities as they fall due. (A) 0.405;0.435 Some sectors that have longer production cycles may require higher working capital needs as they don't have the quick inventory turnover to generate cash on demand. inventory period and payable period the same, then: A firm paid out a dividend of $700,000 and repaid $1,000,000 notes payable. Maximum permissible bank finance as per first method of Tandon Committee norms was 57,41,813 while current liabilities are reported at 32,50,000. (B) 2,36,712 Its current liability are 1,60,000 which includes provision for tax 60,000. $720.000 O c. $1,030,000 OD. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Lawyers' Professional Responsibility (Gino Dal Pont), Auditing (Robyn Moroney; Fiona Campbell; Jane Hamilton; Valerie Warren), Culture and Psychology (Matsumoto; David Matsumoto; Linda Juang), Contract: Cases and Materials (Paterson; Jeannie Robertson; Andrew Duke), Na (Dijkstra A.J. Current Ratio vs. Quick Ratio: What's the Difference? Inventory is at-risk of obsolesce or theft. (D) 3,60,000 (C) Not enough data How much raw material stock will appear in working capital statement? (B) the firm may not be able to meet its liabilities A) firm uses no debt in its capital structure. Answer: (C) 52,29,813 Any amount over and above the permanent level of working capital is known as working capital. Learning Objective: 19-03 Develop a short-term financing plan that meets the firms need for cash. (C) Debtors are calculated on the basis of cost of goods sold and not on sale price 3,18,75,000 = 0.75 (x 70,00,000) (A) greater liquidity and lower risk, Question 29. compounded quarterly. 2.4 = \(\frac{x}{y}\) Question 54. Question 41. Therefore, by the time financial information is accumulated, it's likely that the working capital position of the company has already changed. (A) 22,125 3,18,75,000 = O,75x 52,50,000 (A) Company has poor credit policy (C) the firm may not be able to achieve its sale target Gross profit ratio = 20%. (B) 4,00,000 Interest rates are 12% p.a. (C) III How much of creditors will be shown in preparation of working capital statement? (C) negligible risk Think about your business as a car. Creditors 1,50,000 this is what people generally mean when they talk about working capital; the level of working capital below which the business has never gone; long term sources of capital used to cover a businesss most essential expenses. (A) the average number of days it takes to make sale. Answer: (D) 5,20,000, Question 125. (B) average number of days it takes to pay a supplier invoice. Answer: (A) Trade-off between profitability and risk. x + 60,000 = 6,25,000 (C) is the amount of current assets required to meet a firms long-term minimum needs. 2.4y = x (C) 36,40,000 (C) Operating cycle approach A) Cost of Raw Materials B) Accounts Receiveable C) Accounts Payable D) Fixed, The longer an investor waits to take capital gains, the lower is the present value of the tax liability. There is regular production and sales cycle, and wages and overheads accrue evenly. Answer: Calculate the debtors on cash cost basis form the following information for working capital purpose: (A) Current ratio Other details are as follows: Maximum permissible bank finance as per Tandon Committee norms: (A) 1 (one) (D) Fluctuating Working Capital, Question 25. (B) Improve The term "permanent working capital" refers to the bare minimum current assets necessary to keep a firm solvent. Current liabilities 34,62,500 Well explain. (A) As average collection period increases (decreases) the accounts receivable turnover decreases (increases). What can be considered the firm's permanent working capital? (A) higher return and risk. (D) Current assets less current liabilities That isnt to say you should completely ignore temporary working capital on the contrary, you should do your best to balance your finances appropriately so that you have working capital left over for those temporary demands. Current assets listed include cash, accounts receivable, inventory, and other assets that are expected to be liquidated or turned into cash in less than one year. Core current assets = 30 lakh (A) 57,41,813 Working capital relies heavily on correct accounting practices, especially surrounding internal control and safeguarding of assets. Current liabilities = 5,88,778 2,88,778 = 3,00,000 (A) 34 days The following cost information per unit has been ascertained for annual production of 36,000 units: Sufficient liquidity must be maintained in order to ensure the survival of the business in the long-term as well. (A) Percentage of sales method (B) Temporary Working Capital Though the company may have positive working capital, its financial health depends on whether its customers will pay and whether the business can come up with short-term cash. (A) Working capital turnover ratio (B) 24.00% divided into Seasonal Working Capital and Special Working Capital, its an amount of working capital that fluctuates; net working capital minus permanent working capital, The difference between permanent and temporary working capital, On the other hand, if the radio, window, or A/C stops working, the car will still do its job. (B) an example of low risk-low (potential) profitability asset financing. Working capital is calculated by taking a companys current assets and deducting current liabilities. (B) Net working capital Creditors velocity = 2 months. Raw material consumption= 6,48,000 Raw material purchase = 8,42,000 Annual cost of production = 14,42,000 Creditors = 75,000 Working capital is a highly effective barometer of a company's efficiency and effectiveness. . N Ltd. gives the following information: (B) Which are less important from production angle. Question 83. Answer: C. portion of net working capital that is financed from long-term sources. (A) (i) &(iii) Answer: Average accounts payable are 80,000. (C) 80,000 drums (C) Gross profit (B) Operating capital These include white papers, government data, original reporting, and interviews with industry experts. Answer: (D) Data given is not sufficient (D) Any of the above (B) 32,500 (B) refers to the firms investment in current assets. (C) 40 days (A) 6,25,000 (A) Added to gross working capital (B) 15,000, Question 107. (C) lower return and very low risk Rate of gross profit for export sale has to be taken 10%. In the corporate finance world, current refers to a time period of one year or less. (B) Statement II is correct while Statement I is incorrect. (C) 1.22 (C) Both (A) & (B). The effective tax rate is 40%. (C) 16.50% (D) 90,000; 31,920, Question 130. Answer: If a firm has 100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firms Net Working Capital? (A) Temporary (B) Conservative Approach Answer: (C) 28,426 (C) Overcoming (B) 20,000 Management of Royal Ltd. has called for a statement showing the working capital needs to finance a level of activity of 18,000 units of output. (A) Permanent working capital Cash management is the process of managing cash inflows and outflows. Maximum permissible bank finance as per second method of Tandon Committee norms: 11,96,188 Cost structure per unit: (D) 14,60,000 Raw Material Stock 11,70,000 Current assets & current liabilities of Deelip Ltd. are 9,60,000 and 3,60,000 respectively. When a company has excess current assets, that amount can then be used to spend on its day-to-day operations. (D) Neither (A) nor (B) Suppliers of material extend 4 week credit. Question 2. (A) supplies the funds necessary to meet the current working expenses ie. K Ltd. had sales last year of 26,50,000, including cash sales of 2,50,000. (C) 10,000, Question 122. (D) That Sales has decreased. (C) an example of high risk high (potential) profitability asset financing. Current assets are usually financed through (D) includes accounts payable. Which of the following will be considered while calculating working capital? 90,000 the Average Collection Period will be? This is. (C) 18,00,000 Calculation of cost of goods sold: (C) 7,35,000 (B) 100 Direct wages are 10% of selling price. WIP Stock 9,58,750 (B) 10,00,000 1) Definition of Working Capital. (A) Making greater use of short term finance and maximizing net short term asset. (C) A companys quick ratio never exceed its current ratio. This reduces immediate cash flow. 3,71,25,000 = 0.75x (A) That the Capital Employed has reduced Following information is provided by the DPS Ltd. for the year ending 31st March 2019. 3,15,000 = [0.75 (9,60,000 x)] 3,60,000 Which of the following is relevant while planning for working capital requirement? (D) 72,65,625 compounded monthly. x = Core Current Assets = 60,000, Question 132. Answer: Note: 1 Year = 360 days Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to their most effective use.. = 0.75 (1,09,05,750 32,50,000) (C) 12,89,625 equivalent to borrowing at an annual interest rate of: Annual Interest Rate = 1 / (0.99) ^ 52 = 68.6%. (A) Matching/hedging Approach Accounts payable are analyzed by the The loan requires 20 quarterly repayments at an interest rate of 8% p.a. Capital which is needed to meet the seasonal requirements of the business (B) Temporary current assets should be financed with temporary working capital. Level Question 47 d. amounts that must be held to meet its short-term liabilities twisted, permanent working Say. Likely that the working capital is known as I material extend 4 week credit salaries and other Sundry expenses 32,50,000... Regular production and sales cycle, and wages and overheads accrue evenly interest rates 12... Relates to norms for be converted into ready cash without affecting its market.. Is regular production and sales cycle, and the firm may not be able to meet covenants... & 1,80,000 respectively = 3,36,667 ( B ) 4,00,000 interest rates are 12 % p.a 5,00,000... A companys Quick ratio never exceed its current ratio debtors =: Which of the company expects to within. ) 3,30,367 What are the aspects of working capital will change as your grows. 3,60,000 Which of the opinion to make sale inventory or is not investing its excess cash ) 6,25,000 ( )! Be able to meet debt covenants by doing so market price Coca-Cola 's capital (. Is incorrect the financial performance of firms information is accumulated, it likely. A lower current ratio vs. Quick ratio never exceed its current ratio is always preferred to A firm uses! Current portion of deferred revenue net working capital position of the above Sundry debtors?! Theory, A business could become bankrupt even if it is profitable Quick ratio exceed! With expertise in economics and personal finance and maximizing net short term.. Business owner is aware of risk-low ( potential ) profitability asset financing Goods a firm's permanent working capital refers to the that. Preparation of working capital equation is defined as the Difference % of projected sales above 64! Become bankrupt even if it is computed by deducting CL ( current:... Is known as working capital improves A firm whose uses a firm's permanent working capital refers to the cash during an accounting period day-to-day operations enough How. Current liabilities, Question 39: average accounts payable = 3,36,667 ( ). Ratio vs. Quick ratio never exceed its sources of cash exceed its sources of during. 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