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Hi Sir,
I am looking at Q2 a) of 2019 Sep/Dec paper. Can you please explain the next to last line of the Dividend capacity calculation – Investment in additional assets in more detail?
I understand it is 25% of the increase for every dollar of Operating Profit: (25% x 0.03 x 2678), but then why do they divide it by (1.03 x 0.02) ?
Many thanks!
But the investment is 25% of every $ increase in revenue, not operating profit 🙂
The profit is only 2% of the revenue!
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