# Financial Performance Measurement Part 2

#### Financial Performance Measurement: Please note that this lecture relates to Chapter 15 of the Course Notes and not Chapter 14 as stated in the lecture.

1. says

Dec 2008 question 2 part c

Dear Sir,

if possible can you help,

I cant understand how gross profit for year 3 & 4 is calculated.

with thanks

• says

You can find a recording of me going through this question linked from the F5 main page.

(PS Unless a question relates directly to the lecture, please post on the ‘Ask ACCA Tutor’ forum)

• says

Thank you sir,

sorry the enquiry was no 1 on performance management – Pace company

thanks

• says

Although the examiners answer is correct, it is not very well explained.
In the first two years, the GP is 40%. So…..for every 100 sales, the cost will be 60 and the profit 40.
If sales price falls by 5%, the the sales falls to 95 but the costs stay at 60, which gives profit of 35.
So….the profit % becomes 35/95 = 36.842%
Same idea for the following year.
(Whats probably easier is to do what the examiner mentions below this part of the answer, and to calculate the costs per unit. They stay the same, and so the profit each year is the revenue less the costs. It takes a little longer, but in the middle of the exam is maybe more obvious)

• says

thanks a lot

2. says

I do not want to sound weird, but I actually come to open tuition for fun, I so enjoy watching the lectures!!!

3. says

Thank you again for the wonderful lecture.
I want to say that I really appreciated you mentioning that gearing is leverage. I was wondering what gearing could possibly be. It became clear to me in a second after you said that.
I cannot thank the tutors enough for the great lecturing.

4. says

Hello,
My question is related to q.85 ” Bridgewater Co” from practice and revision kit of BPP which is also a question from 06/2008 exam session.
Can anyone tell me how to arrive to the calculation of additional training costs =2.0 and 2.4 and additional room hire costs of 1.0 and 1.2.
Thank you

5. for the payables days, couldn’t you get a more accurate picture of purchases by adding inventories to cost of sales? I appreciate that doesn’t take opening inventories into account (which we could subtract for 2007 (1006-871), but don’t have an opening inventories value for 2006, so this may be a problem.