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JAIIB AFM Unit 27 — Working Capital Management: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 2 November 2026 · Paper 3 of the November 2026 cycle (28 November 2026)

This page is a free slice of our JAIIB AFM question bank for Unit 27 — Working Capital Management (Module C — Financial Management). The Mock Centre holds 19 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

AFM · Module C19 MCQs in the Mock Centre5 free belowPaper on 28 November 2026

Key facts examiners test from this unit

  1. Gross WC = total current assets; Net WC = TCA − total current liabilities; Indian banking practice expects ≥25% of TCA from long-term sources.
  2. Longer operating cycle = more working capital locked up; requirement depends on industry, cycle, seasonality, credit policy, growth.
  3. Sources: own funds, bank borrowings (the main external source), trade credit, factoring (domestic receivables, with/without recourse) vs forfaiting (export receivables, without recourse).

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
Gross Working Capital is:
Why (b): Gross Working Capital = TOTAL current assets — the whole short-term asset pool.
Question 2 of 5
A LONGER working capital cycle means:
Why (b): A longer cycle keeps money locked longer in stock and receivables — MORE working capital needed.
Question 3 of 5
Which of these does NOT affect a firm's working capital requirement?
Why (d): Working capital needs depend on the nature and scale of the business, the production cycle, seasonality and the credit terms given and received. The face value of shares has no bearing on them.
Question 4 of 5
Which of these is NOT a source of working capital finance?
Why (d): Working capital is funded by own funds, bank limits, trade credit, customer advances and market instruments such as commercial paper and factoring. Investing in other companies' shares is a USE of funds.
Question 5 of 5
Under Tandon Method 2, the borrower's margin is:
Why (b): Method 2: margin = 25% of TOTAL CURRENT ASSETS — stiffer than Method 1, engineering a ~1.33 current ratio.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
Gross WCNet WCTCA vs TCA − TCL
WCGNet WCExcludes bank borrowings from CL vs deducts ALL CL
Practise all 19 questions on Unit 27. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,600+ AFM questions, the full and module mocks, Smart Revision and the Readiness Score for 18 months (₹1,299). Not sure where you stand? Sit the free 120-question mock first (all four papers, questions drawn from pages like this one, real exam screen).
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of November 2026; verify from official sources before relying on them in practice.