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Unformatted text preview: operating profit margin, combined wit h an increase in the ordinary shareho lders funds, has resulted in a sharp decline in the return on ordinary shareho lders funds in the current year. However, this decline is partly due to an 1 Financial accounting for decision makers (5th edition) Atrill and McLaney Exercise solution accounting po licy change. We can see fro m the balance sheet for the current year that there has been a revaluat ion of land and buildings and this has resulted in a large revaluat ion reserve being created, which in turn has had a significant effect on the amount of equit y (shareho lders funds) reported in the balance sheet. This account ing policy change has also had an impact on the gearing ratio for the current period. Despite a sharp increase in the amo unt of outside borrowing, the gearing ratio ha...
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This note was uploaded on 11/29/2009 for the course ACCOUNTING 2 taught by Professor Reynolds during the Spring '08 term at Open Uni..
- Spring '08