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

By Swarnakshi Jha (ex-banker) · Updated 20 September 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
Working capital requirement is affected by:
Why (d): ALL of them: nature and scale of business, production cycle, seasonality, and credit terms given/received jointly set the requirement.
Question 4 of 5
Sources of working capital finance include:
Why (d): ALL of them: own funds, bank limits, trade credit, customer advances and market instruments (CP) together fund working capital.
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 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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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 September 2026; verify from official sources before relying on them in practice.