BMAN$21020$A

SECTION B: $($Answer ALL QUESTIONS$)$

Question $6.$ Financial Instruments, Debt and Equity

The finance director of Leaf plc has prepared the following draft financial statements for presentation to the bank that has lent the business $40m.$ The loan agreement requires a gearing ratio $($calculated as "interest$-$bearing debt divided by Equity"$)$ below $0\mathrm{.}5,$ otherwise the loan becomes repayable. Based on these draft financial statements, the finance director claims that gearing is $0\mathrm{.}4(40/100).$

$\backslash$table$[[$Leaf plc: Summarised Statement of Financial,$],[$Position $($Draft$,$ unaudited and pending review$),m$