For calculation of ratios such as return on assets/return on fixed assets, should I be using the end of period assets by default, or the average assets? I came across a question on schweser which required me to calculate the return on assets ratio, but my calculation was wrong because I used average assets in the denominator, whereas the solution used end of period assets.
On the real exam they won’t give you enough information to be able to do it incorrectly as you did. Either you’ll be given only one balance sheet, or else they’ll tell you to use only the current year’s balance sheet numbers for ratios.
The purpose of the exam is not to be tricky, which is what the question you cite is doing.
Got it. Thanks