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SBOTS Accounting & Financial Management Flashcards
61 question-and-answer cards covering Accounting & Financial Management as it is examined in SBOTS. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Accounting & Financial Management deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
State the formula for net profit margin.
Net Profit Margin = (Net Profit / Net Sales) x 100.
State the formula for Return on Equity (ROE).
ROE = (Net Profit after Tax / Shareholders' Equity) x 100.
State the formula for Return on Capital Employed (ROCE).
ROCE = (Operating Profit / Capital Employed) x 100, where Capital Employed = Total Assets - Current Liabilities.
State the formula for the debt-to-equity ratio.
Debt-to-Equity Ratio = Total Debt (Liabilities) / Shareholders' Equity.
What does the interest coverage (times interest earned) ratio measure and how is it calculated?
It measures the ability to meet interest payments; Interest Coverage = Operating Profit (EBIT) / Interest Expense.
What is the difference between liquidity ratios and solvency ratios?
Liquidity ratios assess the ability to meet short-term obligations; solvency ratios assess long-term financial stability and the ability to meet long-term debt obligations.
State the formula for the inventory (stock) turnover ratio.
Inventory Turnover = Cost of Goods Sold / Average Inventory.
State the formula for the receivables (debtors) collection period in days.
Receivables Collection Period = (Average Trade Receivables / Net Credit Sales) x 365.
What does the asset turnover ratio measure and how is it calculated?
It measures how efficiently assets generate sales; Asset Turnover = Net Sales / Total Assets.
State the future value formula for a single sum under compound interest.
FV = PV x (1 + r)^n, where r is the interest rate per period and n is the number of periods.
State the present value formula for a single future sum.
PV = FV / (1 + r)^n.
Define Net Present Value (NPV) and its decision rule.
NPV is the sum of discounted future cash inflows minus the initial investment; accept the project if NPV is positive (greater than zero).
What is the Internal Rate of Return (IRR) and its decision rule?
IRR is the discount rate at which a project's NPV equals zero; accept the project if IRR exceeds the required rate of return (cost of capital).
What does the payback period measure and what is its main limitation?
It measures the time taken for cumulative cash inflows to recover the initial investment; its main limitation is that it ignores the time value of money and cash flows after the payback period.
What is the Weighted Average Cost of Capital (WACC)?
The average rate of return a company must earn on its investments, weighting the cost of each source of finance (debt and equity) by its proportion in the capital structure.
Why is the cost of debt usually lower than the cost of equity?
Because debt is less risky to investors (fixed interest, priority on repayment) and interest is tax-deductible, giving a tax shield, whereas equity holders bear residual risk and expect higher returns.
Define working capital and give its formula.
Working capital is the funds available for day-to-day operations; Working Capital = Current Assets - Current Liabilities.
What does the working capital (cash conversion) cycle represent?
The time taken to convert resources into cash: Inventory Days + Receivables Days - Payables Days; a shorter cycle indicates more efficient working capital management.
State the key distinction between internal audit and external audit in terms of purpose.
Internal audit evaluates and improves the effectiveness of internal controls, risk management and operations for management; external audit gives an independent opinion to shareholders on whether the financial statements show a true and fair view.
To whom does an external auditor report, and to whom does an internal auditor report?
The external auditor reports to the shareholders/members; the internal auditor reports to management and/or the audit committee.
Is internal audit a statutory (legal) requirement like external audit?
No; external audit is generally a statutory legal requirement for companies, whereas internal audit is usually voluntary and established by management.
List the main stages of the audit process.
Planning (understanding the entity and assessing risk), testing of internal controls, substantive testing of transactions and balances, gathering audit evidence, and forming/reporting the audit opinion.
What is audit evidence and what makes it sufficient and appropriate?
Audit evidence is the information used by the auditor to support the audit opinion; it is sufficient when there is enough quantity and appropriate when it is relevant and reliable.
Name four common methods of obtaining audit evidence.
Inspection, observation, inquiry, confirmation, recalculation/reperformance, and analytical procedures (any four).
What this deck covers
The Accounting & Financial Management deck follows the SBOTS Accounting & Financial Management syllabus — 6 chapters and 22 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 10.2 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 129 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Accounting & Financial Management flashcards FAQ
How many Accounting & Financial Management flashcards are in this SBOTS deck?
61 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these SBOTS flashcards free?
Yes. The preview here is free to read with no signup, and the full 61-card deck is free inside the Examius app.
What do the Accounting & Financial Management cards cover?
They follow the SBOTS Accounting & Financial Management syllabus — 6 chapters and 22 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.