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Cash Flow Statements

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Cash Flow Statements

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  • July 16, 2018 at 12:48 pm #463151
    eveadams
    Participant
    • Topics: 16
    • Replies: 1
    • ☆

    Dear Mr. Moffat,

    I can’t understand why you start with Profit before Tax and add the Interest back on only later to subtract it again. Why don’t you just start off with the (PBIT) Profit before Interest and Tax in the first place?

    July 16, 2018 at 4:13 pm #463237
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54478
    • ☆☆☆☆☆

    We could start with the profit before interest and tax, but strictly (according to the format in the accounting standard) we are supposed to start with the profit before tax and add back the interest so as to then have the profit before interest and tax 🙂

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