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Hi,
I have a doubt regarding this question. I have posted the link down:
https://www.accaglobal.com/content/dam/acca/global/pdf/p4_2010_dec_sample_q.pdf
I want to understand 1 thing:
1)”Thereafter every $1 increase in sales revenue will require a 10% increase in working capital.”
What does this mean?
Waiting for a reply at the earliest.
The question is terribly badly worded because you could interpret it in different ways.
What the examiner wanted it to mean is that if (for example) the sales increase by $100, then we will need extra working capital of 10% x $100 = $10.
However, you could read it differently and the examiner would have to allow it. (This was only a sample, for real exams the examiner and markers have regular meetings and it would become obvious that people were reading it differently – they would then change the marking to still give people the marks).
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