Theory Question On Working Capital

13 JIT

Suggest the benefits PS Co might expect to derive from a JIT agreement in

addition to the benefits specified in the question.
(7 marks)

14 EOQ

Determine whether the new system is worthwhile in financial terms,

assuming that the EOQ is used under the existing system.

15 Thorne Co (FMC, 12/05, amended)

Discuss the factors to be considered by Thorne Co when planning ways to

invest any cash surplus forecast by its cash budgets. (5 marks)
Discuss the advantages and disadvantages to Thorne Co of using
overdraft finance to fund any cash shortages forecast by its cash budgets.
(5 marks)
Explain how the Baumol model can be employed to reduce the costs of
cash management and discuss whether the Baumol cash management
model may be of assistance to Thorne Co for this purpose.(5 marks)

16 Anjo Co

Explain cash operating cycle (working capital cycle) significance.

17 Joan Co

Discuss the relationship between working capital management and

business solvency, and explain the factors that influence the optimum cash
level for a business.
(7 marks)

18 Special Gift Suppliers (FMC, 12/01, amended)

As an adviser to Special Gift Suppliers Co, write a report to the financial

controller that outlines:
(a) How a credit control department might function
(b) The benefits of factoring
(c) How the financing of working capital can be arranged in terms of
short and long
term sources of finance

In particular, make reference to:

(i) The financing of working capital or net current assets when short term
sources of finance are exhausted
(ii) The distinction between fluctuating and permanent current assets. (15
marks)

19 Ulnad Co (Specimen paper 2007, amended)

explain the relevance of these values for the cash management of the company.

20 Danul Co (Specimen paper 2007, amended)

Identify and explain the key areas of accounts receivable management. (5

marks)

Discuss the key factors to be considered when formulating a working

capital funding policy. (5 marks)

21 PKA Co (12/07, amended)

Identify the objectives of working capital management and discuss the

conflict that may arise between them.
(3
marks)

22 HGR Co (6/09, amended)

Discuss the working capital financing strategy of HGR Co. (5 marks)

23 RGH Co (6/09, amended)

Discuss how risks arising from granting credit to foreign customers can be
managed and reduced.
(10
marks)

24 APX Co (12/09, amended)

Analyse and discuss the working capital financing policy of APX Co. (6
marks)

25 ZSE Co (6/10, amended)

Discuss whether profitability or liquidity is the primary objective of working

capital management. (5 marks)

26 WQZ Co (12/10, amended)

Discuss the factors that should be considered in formulating working

capital policy on the management of trade receivables.
(8 marks)

27 Bold Co (12/11, amended)

Explain the meaning of the term cash operating cycle and discuss the
relationship between the cash operating cycle and the level of investment
in working capital. Your answer should include a discussion of relevant
working capital policy and the nature of business operations. (6 marks)

29 ZPS Co (6/11,amended)

Discuss the factors that influence the formulation of working capital policy.
(8 marks)

31 PXK Co (12/12, amended)

Identify and discuss the factors to be considered in determining the

optimum level of cash to be held by a company. (5 marks)

Discuss the factors to be considered in formulating a trade receivables

management policy. (5 marks)