2013 september no 1 May I know the meaning of substantial receipt ? and what is the difference between currency option and a currency future? 2013 September no 6 Can I know why the low interest cover ratio in a highly cash generative business lead to any fluctuation in operating profit will lead to a greater fluctuation in earnings per share?
Q1 : A 'substantial receipt' means a significant amount of money. Currency futures are defined in Section 1.2 of Chapter 8 and options in Section 2. Q6 : This is a tough question and the phrase 'most realistic' suggests there may be some judgement needed in choosing the best option. Often low interest cover indicates risk of being able to pay outgoings such as interest. However, a business generating lots of cash probably can make these payments even when profits fluctuate downwards. So, fluctuating operating profits might instead lead to fluctuating shareholder earnings in this case. Remember that shareholder essentially get the residual earnings after fixed interest payments have been made.
