MI – Nov 2014 – L1 – SA – Q5 – Decision-making techniques

Working Capital, Cash Cycle, Inventory, Receivables, Cash Management

Question

The working capital cycle starts and ends with ONE of the following:

A. Cash and Payables
B. Inventory and Receivables
C. Work in Progress and Inventory
D. Cash and Inventory
E. Cash and Receivables

Answer

Answer: E. Cash and Receivables

Explanation:
The working capital cycle starts with cash, which is used to buy inventory. After production, the finished goods are sold, generating receivables. The cycle ends when the receivables are converted back into cash, completing the cycle. This reflects the full working capital cycle from the cash invested in inventory to the cash received from customers.

Tags: Cash Cycle, Cash Management, Inventory, Receivables, Working Capital
Level: Level 1

Topic: Decision-making techniques
Series: NOV 2014

Uploader: Dotse