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hi sir
for the growth in turnover and PBIT cant we use the same formula as that of dividend growth. as it takes the effect of years. the way you are doing excluding that effect.
turnover =10.4%
43800*(1+g)^3=59000
PBIT= 9 percent
I do not know what you mean.
We are finding out what the past rate of growth is, and as far as the turnover is concerned:
43800x (1+g)^3 = 59000
Therefore (1+g)^3 = 59,000/43,800
Therefore 1+g = third root of (59000/43800) = 1.104
g = 0.104 or 10.4% per yearBy all means state that, but when reviewing the position it is rather more important to note that turnover is growing as I explain in the lecture rather than just producing a list of figures. It is not the exact rate of growth that really matters – it is the discussion that gets most of the marks in this sort of question. (I assume that you have watched the lectures and are not trying to use the notes on their own?)
sir i saw your lecture and you calculated in the following way
(59000-43800)/43800=11.9 % which i was unable to calculate that figure 11.4 this formula actually give 34 percent. you then calculated PBIT growth as 29.9 percent and analyze that revenue growth doest not match with that of profit.
but if i use growth formula it gives totally different answer
10.4 percent for the revenue
9 percent for PBITso my analysis would be different.
the other thing actually my question was to why you didn’t use growth formula for turnover and PBIT to calculate growth over the period of four years in your lecture.
i do agree discussion is important but will simply calculating the percentage difference of y1 and y4 give a reasonable answer?
There is no ‘correct’ answer to this question, just as there is rarely ever one ‘correct’ answer for any Paper AFM question.
This sort of question will require you to discuss. The more ‘backing figures’ that you have the better, but not at the expense of the discussion.
By all means calculate the average annual growth rates, but does it really give much more insight as to what is happening? Whether you look at the overall growth over the period, or the average yearly growth rate, in both cases (obviously) revenue has been growing a little faster than the PBIT and so I do not understand why your comments on it would be different.
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