Mr. Omar is a Financial Manager of an Omani industrial company located in Muscat that has another three different branches in the Omani Market. The head company besides other branches are dealing with many suppliers and many customers on a daily bases; Mr. Omar wants to evaluate the working capital in all branches for the year 2020 in order to improve the operating performance of the company and make suitable and needed decisions based on results as well as he will need some calculations with regard to the cash conversion cycle of each branch and evaluate different elements in the operating cycle so that will enable him to manage the working capital properly and improve the over whole performance in future.

The Financial statements of the head company in Muscat shows a Net Sales of OMR 3,305,000, Beginning Inventory of OMR 400,000, Ending Inventory OMR 220,000, Average A/R are OMR 410,000, Average A/P are OMR 320,000, the costs of goods sold equals to OMR 1,900,000 and Net purchases are 70% of costs of goods sold.

you are working in the financial department of the company and you have been assigned and two of your colleagues to assist the financial manager with regard of all needed data and information from other different departments such as warehouse, production and sales of all branches that are located in Salalah, Nizwa, Sohar to smooth and accelerate the process of managing the working capital; the following will be some issues you need to solve so you can provide accurate report to the financial manager:

1)

The financial manager wants to shorten Sohar branch number of days of payables from 90 days to 75 days and the average accounts payable is OMR 100,000. What will be the net purchases?

a.

OMR 486,667

b.

OMR 400,000

c.

OMR 40,000

d.

OMR 405,556

2)

Sohar branch has a number of days of receivable of 60 days and the net sales are OMR 600,000. Calculate the average accounts receivable?

a.

OMR 9,863

b.

OMR 98,630

c.

OMR 49,315

d.

OMR 100,000

3)

Sohar branch has OMR 500,000 COGS, the opening inventory is OMR 25,000 and the closing inventory is OMR 90,000. Calculate the number of days of the inventory turnover?

a.

65.70 days

b.

83.95 days

c.

41.975 days

d.

18.25 days

4)

If the sales of all branches of the company are OMR 6,000,000 and the average debtors are OMR 738,630, then the receivables turnover is:

a.

45.66 days

b.

46.23 days

c.

44.93 days

d.

90.12 days

5)

Cash conversion cycle measures:

a.

the number of days in which cash is tied up in accounts receivable

b.

All of the given options

c.

the number of days in which cash is tied up in assets

d.

the number of days in which cash is tied up in inventory

6)

Which of the following will lengthen the cash conversion cycle?

a.

The firm adopts a policy of reducing payables payment turnover

b.

A temporary situation in the commodity market forces the firm to increase stock of raw materials while prices are low

c.

The average inventory conversion period falls from 50 days to 36 days

d.

Customers are given a larger discount for cash transactions, which reduces the receivable collection period.

7)

The amount of funds necessary to cover the cost of operating the Company is:

a.

The operating capital

b.

The net working capital

c.

None of the given options

d.

The working capital

8)

Which of the following statements is NOT correct with regard to the business working capital?

a.

It is the amount of funds necessary to cover the cost of operating of the business

b.

Efficient working capital management helps to meet short term liquidity and long term obligations

c.

Efficient working capital management leads to improve the operating performance of the business concern

d.

Net Working Capital is the excess of current assets over the current liability of the concern during a particular period

9)

Which of the following statements about short-term financial management is true?

a.

It focuses on the selection of the correct fixed assets in which to invest

b.

None of the given options

c.

It can be conducted without being worried about maximizing firm value

d.

It includes decisions with regard to the level of current liabilities

10)

Which of the following statements is correct with regards inventory?

a.

Consumable material are held as a after-sales service for products supplied to customers

b.

Quality control tests may be needed on all types of materials

c.

Spares found in business due to the delays in doing work, long movement times between operations and queue bottlenecks

d.

Work-in-Progress is tied up stock and needs to be kept to a minimum