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Thank you very much for this helpful content.
As I have been going through KAPLAN exam kit, in performance measurement section, there were lot of questions asking to find different ratios.
However, lot of the ratios requiring to find capitals and liabilities.
How would you go about choosing which entry is capital or liability.Also, isn’t this related to F3 rather than F2?
Could this sort of questions appear in the actual exam?I only have the BPP Kit – not Kaplan – and so it is difficult for me to comment without seeing the actual questions you are referring to.
In general, equity capital is what is owed to the shareholder; long-term capital is both shareholder finance and long-term borrowings, and it is this that is generally more important (the total long-term finance of the business) when looking at profitability measures.These sort of measures can be asked in both F2 and F3.
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