Simple FRA question question

soverby

I'm sorry to ask something so basic... Mind is going into meltdown.

For ratios, whenever we use a balance sheet item - we always take the average of the period... ie. (2009 value + 2010 value) / 2

luda002

nope - for blended ratios (such as ROE), you can use the average. For pure balance sheet ratios, just use the balances.

I/S gives you a year's activity, while a B/S gives you a point in time snapshot.

So when calculating ratios that rely on both B/S and I/S accounts, use the average on the B/S.

liquidity

Thanks. I think I'm getting stupider as we get closer to the exam!

zephyranalyst

Whoops im losing it too, blended ratios yes i see in the post. FML.