Reference no: EM132970399

Problem 1: A higher level of receivables implies which one of the following?

a. It increases available operating working capital.

b. It increases the need for operating working capital, which must be met by selling financial assets, borrowing money, raising equity, or retaining profits.

c. It does not affect financing needs.

Problem 2: A higher level of inventories implies which one of the following?

a. It increases available operating working capital.

b. It increases the need for operating working capital, which must be met by selling financial assets, borrowing money, raising equity, or retaining profits.

c. It does not affect financing needs.

Problem 3: A higher level of prepayments [assets] implies which one of the following?

a. It increases available operating working capital.

b. It increases the need for operating working capital, which must be met by selling financial assets, borrowing money, raising equity, or retaining profits.

c. It does not affect financing needs.

Problem 4: A higher level of PP&E implies which one of the following?

a. It increases available fixed capital.

b. It increases the need for fixed capital, which is must be met by selling financial assets, borrowing money, raising equity, or retaining profits.

c. It does not affect financing needs.

Problem 5: A higher level of current payables implies which one of the following?

a. It decreases available operating working capital.

b. It decreases the need for operating working capital, which means that the company can increase its cash balance, pay down debt, or distribute cash to shareholders.

c. It does not affect financing needs.

Problem 6: A higher level of current net operating assets implies which one of the following?

a. It increases the level of available operating working capital.

b. It increases the need for operating working capital, which must be met by selling financial assets, borrowing money, raising equity, or retaining profits.

c. It does not affect financing needs.

Problem 7: A higher level of non-current net operating assets implies which one of the following?

a. It increases the level of available fixed capital.

b. It increases the need for fixed capital, which must be met by selling financial assets, borrowing money, raising equity, or retaining profits.

c. It does not affect financing needs.