ACCA FR September 2026: Why “Gearing Is Higher” Scores Zero in the 13-Mark Analysis

The FR interpretation question is worth up to 13 marks, and it is the question candidates fail most consistently. The examiner has now spelled out why in two consecutive reports: you score nothing for saying a ratio is "better" or "worse".

The examiner said it twice — in the same words

On Aqua Co in the Sept/Dec 2025 FR examiner's report: "No marks are awarded for stating the constituent parts of a ratio calculation or what the ratio means (in general terms); nor are marks awarded for stating that a ratio is 'better' or 'worse'." The March/June 2025 report said the same thing about Longannet Co. Both diets open the section identically — the performance in interpretation questions continues to be poor.

The diagnosis in both reports is exam technique, not knowledge. Two failures: not addressing the requirement, and not adequately using the information in the scenario.

Here is the uncomfortable part. In Sept/Dec 2025 most candidates performed very well on the 4-mark ratio calculation. They could do the maths. They then walked into the 13-mark analysis and wrote about what gearing means.

Worked example: the gearing point

Aqua Co was choosing between two acquisition targets. Coral Co's gearing was 125% (100% including a foreign exchange gain). Reef Co's was 33.3%.

What most candidates wrote: "Coral Co's gearing of 125% is worse than Reef Co's 33.3% because it is higher. This means Coral Co is more highly geared and carries more financial risk."

Zero marks. That is a restatement of the number followed by a textbook definition.

What scores: "Coral Co is not only more highly geared at 125%, its debt falls due for repayment in two years. Reef Co has both less debt and eight years before repayment. Coral Co therefore presents a near-term refinancing risk that Aqua Co would inherit on acquisition — Reef Co's debt is comfortably beyond any integration period."

Same ratio. The difference is Notes (2) and (3) in the scenario, which told you the repayment dates. The examiner's phrase is "reflects on the information from the scenario and how it may have impacted the ratios."

The one-off you are supposed to spot

Coral Co's operating profit margin looked better than Reef Co's once the foreign exchange gain was included. The report is blunt: candidates should have commented that the gain "is likely to be a one-off transaction". Many did not use the point at all.

Adjust for one-offs before you conclude. A margin flattered by a currency gain is not a margin an acquirer can rely on next year.

The requirement you are skipping

Aqua Co's requirement had three parts: analyse performance and position, explain whether Aqua Co would exert control, and conclude with a clear recommendation. Many candidates ignored the control element entirely — free marks, gone.

Same pattern on Longannet Co. The scenario said Longannet was the largest supermarket chain in its country. That explains the 16.1% gross margin against a 13.0% sector average and the 79-day payables period against 65 — scale and buying power. Candidates who instead blamed the new budget stores got it backwards: budget stores sell high volume at lower margins.

Three things to change

1. Use the requirement as your headings. If it asks for performance and position, control, and a conclusion, type those three headings before you write a word. The examiner explicitly recommends this. It is the cheapest way to stop dropping a whole sub-requirement.

2. Use the exact formula given. Aqua Co stated gearing as Debt ÷ Equity. Candidates who used Debt ÷ (Debt + Equity) got no marks — and, critically, no own-figure rule, because the formula was in the requirement. Own figures only rescue you when your workings are visible and the method was yours to choose.

3. Write every point as ratio + scenario fact + consequence. Three components. If your sentence has only the first, delete it. If it has the first two but stops there, you are at half marks — the report notes candidates who used the scenario but "failed to develop their answer to explain how or why the ratio may be affected".

The numbers

FR passed 52% in June 2026. Section C is 40 of the 100 marks and the interpretation question is up to 20 of them once the ratio calculations are counted. It is also the one question where the marks do not depend on remembering a standard.

You already know how to calculate the ratio. The marks are in the sentence after it.