Page 33 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Objectives

6.5 Growth rates

Applying growth rates to given financial information is a common
exam topic.

Forecasting statement of profit or loss and statement of financial position
values

Apply given growth rates to current year figures

e.g. if expected growth = 10% per annum

$ Current Year 1 Year 2

Sales 1,000,000 1,100,000 1,210,000
etc.

Alternatively:

Calculate growth rate from given figures

e.g.

$ Current Year 1 Year 2 Year 3
Sales 500,000 526,000 555,000 590,000

Average annual growth is 3 √ 590,000 ⁄ 500,000 – 1 = 5.7%

25