1) Which of the following ratios is considered a profitability ratio? a) Inventory turnover; b) Gearing ratio; c) Acid-test ratio; d) Earnings per share; e) Both a and c. 2) Which of the following transactions will decrease net working capital? a) Collection of trade receivables; b) Purchase of a truck with cash; c) A large credit sale; d) Payment of taxes payable. 3) What is not a working capital element a) Non-current assets; b) Inventories; c) Trade receivables; d) Cash; e) Trade payables.

4) If gross operating margin as a percentage of sales decreases over the period and the cost per unit of inventory purchases was stable throughout the period, then a) Sales volume must have decreased during the period; b) Sales prices per unit must have decreased during the period; c) Sales prices per unit must have increased during the period; d) Sales volume must have increased during the period.