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I am trying to do calculation for gearing ratio for P3 June 2010 question ‘swift’ but I am getting it right, plz help me
Gearing can be calculated in two ways: D/E or D/(E+D).
The ACCA model answer uses the second way:
E + D = 5,750 + 2,500 = 8,250
D/(E + D) = 2,500/8,250 = 30%thank you so much, can you please tell me how they calculate interest cover and ROCE ratio in this question.
Thanks once again
ROCE = profit before tax and finance costs/c.e = (1200 + 300)/(5750 + 2500) = 18%
Interest cover = profit before interest/interest = (1200 + 300)/300 = 5
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