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Good evening,
please could someone explain why are we not adding back to Profit from operations (in case of Mowair Co -Q.228 in BPP rev.kit) the finance costs?
For OP ratio, ROCE and Interest cover we use as PBIT 12,300 and not adding back 9,200 finance costs? Other examples and the definition suggest that finance costs are added to profit before tax so I am confused about this one. I am trying to search forums for this answer, but not having any luck.
Please help.
thanks,
Kat
As far as FR exam is concerned, you can use both Profit Before Interest & Tax and Profit Before Tax for performance assessment. That is why examiner has used PBIT in some questions and PBT in the rest.
However, if the question specifically states to use either of the figures then you are bound to do what the question has asked. Otherwise, you are free to use either.
Hope it helps.
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