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Answers

Example 3 cont.

Solution

20X6 20X5
Gearing
Debt/(debt + equity)

(11,000/ 36.5% (8,000/ 33.1%
(11,000 + 19,100) (8,000 + 16,200)

Interest cover

Profit from operations/finance costs
(5,000/600) 8.3 (5,000/480) 10.4

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