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I wanted to know the concept of using PBT in cash flows instead of PBIT. as when we are calculating operating activity we start with PBT and then add finance cost, why can’t we simply use PBIT, so we don’t have to add finance cost any more in calculating cash flows from operating activity.
Because thats what examiner prefers. The examiner wants students to demonstrate that the finance cost charged in SOPL is not always equal to the actual paid amount. The focus is on building concept of why we’re doing this than just for the sake of format.
Adding one additional line in a spreadsheet in exam is not gonna take up much time in exam so why get worried?
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