[b_jeff1]

I’m having trouble picking the correct explanation. I have memorized the formulas but can’t seen to grasp the explanation. Can anyone give me a better way to arrive at a answer without confusion.

[kayfcpa16]

What's the question?

FAR - 2/16 - 78
BEC - 2/16 - 78
AUD - 8/16
REG - 8/16

[b_jeff1]

What method do you use to get the correct answer for ratio analysis when you have to pick out the explanation?

[kayfcpa16]

Best way is to understand the cause and effect of the elements and how it changes the ratio… Also what does the ratio say about the Fin Stmts

Eg: Explanation States: XYZ Company purchased long term asset for cash:
Cash = Current Asset – will affect current/quick ratio – decrease

If purchase inventory on credit
Inv = C/A, Credit = C/L – affects current ratio – remain unchanged, quick ratio decreases – inventory not included

FAR - 2/16 - 78
BEC - 2/16 - 78
AUD - 8/16
REG - 8/16

[Author]

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