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Hi,
Can you please explain the example 5 on page 34 of course notes, the example explains gearing ratio of 40% which means debt is 40 % and equity is 60 % .In the solution we are using 100 as equity which is somewhat confusing, can you please explain? Thanks
There is no confusion because the question specifically defines the gearing rate as being the ratio of debt to equity. Therefore for every 100 the debt is 0.4 x 100 = 40.
(Gearing can be fined to two ways, either debt to equity or debt to (equity + debt), but exam questions make it clear which way it is being defined).
It would seem that you are not watching the free lectures, because in the lectures I work through all the examples. It is pointless to use the notes without watching the lectures because they are only lecture notes and it is in the lectures that I explain and expand on the notes. If you are not watching the lectures for any reason then you really need to study from a Study Text from one of the ACCA Approved Publishers.
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