Skip to content
Sign inRegister

Ask the Tutor ACCA AFM

Sep/Dec 2019 Cadnam

SStan6y ago
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!
John MoffatJohn MoffatTutor6y ago#1
But the investment is 25% of every $ increase in revenue, not operating profit :-) The profit is only 2% of the revenue!
SStan6y ago#2
Got it, thanks very much!
John MoffatJohn MoffatTutor6y ago#3
You are welcome :-)
This topic is locked — no new replies.