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November 14, 2019 at 8:22 am
For calculating Payable days, why haven’t we calculated it on Purchases as we can find out the purchases since we have been given the opening inventory(which is the closing inventory of 2006) and the closing inventory of 2007?
John Moffat says
November 14, 2019 at 8:47 am
I do mention in the lecture that it would be better to use purchases. However although we can get the figure for 2007, we cannot get it for 2006 on the information given. If we want to be able to compare we need to compare like with like.
November 14, 2019 at 9:47 am
Ah yeah! Silly me. Thank you.
November 14, 2019 at 3:18 pm
No problem, and you are welcome 🙂
February 22, 2019 at 7:43 am
There are two accepted way of measuring gearing – either debt/(debt + equity) or debt/equity. Obviously they give different figures, and if a figure is required in the exam, the question will specify how it is to be measures. However, what matters with gearing is whether it is increasing or decreasing, and either of the two measures will result in the same conclusion.
February 22, 2019 at 5:18 am
Hello Sir. In FA material, Gearing calculates as Long-term debt/(Equity+Long-term debt). Why such inconsistency? Thank you
February 20, 2019 at 3:23 pm
In the inventory days ratio, why closing inventory was used instead of average inventory?
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