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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Interest on bank overdraft
Dear sir, why interest on bank overdraft is not deduct when calculate PBIT?Thank you
Hi,
It is because it is interest expense and will be deducted after PBIT as a finance cost.
Thanks
Dear sir, sorry my question is not clear.The requirement is to calculate net profit margin .Sale 11200, PBT 465, Loan note interest 80, interest on bank overdraft 15.The answer is net profit margin =(465+80)/11200.I do not understand why the answer is not (465+80+15)/11200?Thank you.
I’d have probably done what you have done and added back the interest on the bank overdraft. They seem to be saying that the bank overdraft is not borrowings and arises from the day-to-day operations but I tend to disagree.
Thanks