OxBowBusiness

Blind leading the blind

Blind leading the blind.

I have just finished a revision session with a Business Studies student. She is taking her examinations this afternoon. In common with so many internally examined courses, she has been told the questions. She merely has to learn the answers and she will pass the exam and then go off to University. (In fact last year a whole class failed all their exams but the college fiddled the results and they were all given a pass and are now at university – the wonders of private education!)

But…I digress.

One of her questions this afternoon is about a private company becoming a public one. She has made notes on this and, being very nervous, she merely wanted me to test her on her notes. One of her notes said:

A private limited company must have less than £50,000 share capital

I explained to her that this was wrong. She became very agitated and told me that this is what her dictionary said – and indeed in the A-Z book it does say this (page 214) – this is the book written by ‘leading examiners’.

For those of you who think these ‘leading examiners’ are right I advise you to look at the companies house site where it says:

“3. Is there a maximum and minimum share capital?There is no maximum to any company's authorised share capital and no minimum share capital for private limited companies. However, a public limited company must have an authorised share capital of at least £50,000 (and, if it is trading, issued capital of £50,000 - see question 5)”

This started me thinking. I remember years ago I read another textbook by a Chief Examiner (for those thinking about whether to be an Examiner or not think of the marketing possibilities if you make it to the top!). This clearly stated that the gearing ratio was Equity: Borrowed Funds

I was new to Business Studies.
I had no degree.
I had nothing really above A level and I hadn’t studied A levels for 6 years.

So I was unsure.

I phoned the Board – and no-one there knew. They advised me that if all my students put this ratio ‘it would be looked at leniently’. So even though I had five other textbooks saying the ratio was at best Borrowed Funds: Equity because this book was by a Chief Examiner then his word counted more than the others.

Or at least the same.

Since then I have wondered, as I look at mistake in marking guidelines and mistakes in exam papers, how many people studying Business Studies have been taught incorrectly – only to gain marks when they repeat the incorrect ‘facts’.

Just a thought.

Chris Sivewright

posted by Duncan Williamson @ 12:41 PM