huangxiaoxie

Dreary Wrote:
-------------------------------------------------------
> They might be thinking in terms of numbers (which
> is wrong).
>
> CA/CL = 10/8 = 1.25.
>
> If CA drop by $2 and CL drop by $2, then CA/CL =
> 8/6= 1.33 (in fact it increases).

They couldn't each fall at an absolute rate of $2. That would mean that CA and CL were translated using different rates. Assuming your currency has depreciated -20% then CA would be 8 and CL would be 6.4. 8/6.4=1.25