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
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Ungeared Beta calculation query
2y ago#1There 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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