The question is as follows Which of the following financial ratios is least likely to be affected by classification of deferred taxes as a liability or equity? A.Return on assets (ROA). B.Debt-to-total assets. C.Return on equity (ROE). I dont understand why A is the answer and not B How will classifying the deferred Tax as a liability or equity affect debt?
It won’t affect debt, but it will affect liabilities.
It’s a poor question; the author was thoughtless.
I thought so. Thanks!
My pleasure.