4. Finance

Working Capital — Quiz

Test your understanding of working capital with 5 practice questions.

Practice Questions

Question 1

A company’s accounts receivable is $45,000, inventory is $30,000, and cash is $15,000. If its accounts payable is $25,000 and the company collects $10,000 from its customers, what will be the new working capital?

Question 2

A company has an average inventory of $60,000, average accounts receivable of $40,000, and average accounts payable of $30,000. Its annual cost of goods sold is $360,000 and annual credit sales are $480,000. What is the company’s working capital cycle in days?

Question 3

A company’s current assets include $20,000 in cash, $50,000 in accounts receivable, and $70,000 in inventory. Its current liabilities include $40,000 in accounts payable and 20,000 in short-term debt. If the company decides to write off $5,000 of uncollectible accounts receivable, what is the new working capital?

Question 4

A company has an inventory turnover period of 50 days, an accounts receivable collection period of 45 days, and an accounts payable payment period of 35 days. If the company negotiates with its suppliers to extend the accounts payable payment period by 10 days, what will be the new working capital cycle?

Question 5

A company’s current assets are $100,000, including $25,000 in cash, $45,000 in accounts receivable, and $30,000 in inventory. Its current liabilities are $70,000. If the company pays off $20,000 of its accounts payable using cash, what will be the new working capital?