Activity Ratios average, mistake, recent, simple

brk1yn

CFAI end of chapter questions uses the most recent year ending inventory, recievables, trade purchases ect when calculating turnover ratios. Yet the formula states it should be an average of the 2 years on the BS. Dont want to make this simple mistake on the exam..... most recent year or avg on BS? thx

Flok

I noticed the same thing. I think they messed up on the solutions to the EOC questions..has anyone checked the errata for this?

The formula in the CFAI text says to use the average inventory/receivables/trade payables etc. in the denominator, so I think it's safe to use that.

Bulla564

ok so whats the verdict?? use average???

MythosHF

average the B/S kiddos