Hi, I had some trouble in question 23.21 of bpp exam kit. the gearing ration should be calculated as 670000/585000 x 100% but instead in the answers its 670000/(670000+585000) x 100%.
Why is that?
Ask the Tutor ACCA MA
bpp exam kit question
6y ago#1Gearing can be calculated in either of two ways. Either non-current liabilities / share capital plus reserves (which is the normal way) or alternatively non-current liabilities / share capital plus reserves plus non-current liabilities.
Obviously they give different answers, but because both ways are valid, exam questions weill make it clear which way is wanted.
This topic is locked — no new replies.