CMA Final · Cost and Management Audit · Management Audit in Different Functions
In a management audit of the finance function, which review best addresses the adequacy of working capital management?
Analysing the receivable collection period, inventory holding and payable terms against policy and industry norms best addresses working capital management. These measures show the operating cycle and liquidity efficiency, while board size, report design and font size have no bearing on working capital adequacy.
- AAnalysis of receivable collection period, inventory holding and payable terms against policy and industry normsCorrect
- BCounting the number of directors on the board
- CReview of the colour scheme of the annual report
- DChecking the font size used in the budget manual
Explanation
Working capital adequacy is assessed through receivable days, inventory holding and creditor terms relative to policy and industry norms. The other options are unrelated to liquidity and the operating cycle.
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