Question #16
Reading: Reading 10 Multinational Operations
PDF File: Reading 10 Multinational Operations.pdf
Page: 9
Status: Incorrect
Correct Answer: A
Your Answer: B
Question
Which of the following ratios is affected by translation under the current rate method?
Answer Choices:
A. Fixed asset turnover ratio
B. Net profit margin
C. Debt/Assets ratio
Explanation
Recall that all pure income statements and balance sheet ratios are unaffected by
translation under the current rate method. The fixed asset turnover ratio is not a pure
ratio; it consists of an income statement measure (sales, translated at the average rate)
and a balance sheet measure (fixed assets, translated at the current rate).