Read the following statements:
1. Working capital is the amount of funds necessary to cover the cost of operating the enterprise.
2. Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another.
A. 1 and 2 both are correct
B. 1 and 2 both are incorrect
C. 1 is correct, but 2 is incorrect
D. 1 is incorrect, but 2 is correct
Answer: Option A
The appropriate ratio for indicating liquidity crisis is
A. Operating ratio
B. Sales turnover ratio
C. Current ratio
D. Acid test ratio
A. Net present value method
B. Internal rate of return method
C. Profitablity index method
D. None of the above
A. a-4, b-3, c-1, d-2
B. a-3, b-4, c-1, d-2
C. a-4, b-3, c-1, d-2
D. a-3, b-2, c-4, d-1
Which one of the following assumptions is not included in the James E. Walter Valuation model?
A. All financing by retained earnings only
B. No change in the key variables such as EPS and DPS
C. The firm has finite life
D. All earnings are either distributed as dividends or invested internally immediately
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