Pure balance sheet ratios

CFA Level II
#1

Under current method, I understand that all items on the BS are translated at current rate except shareholders equity.

Thus pure balance sheet ratios won’t change because you apply both the numerator and denominator with the same exchange rate and they would cancel each other out.

However, how about debt/equity ratio. It is a pure balance sheet ratio but we are using two different exchange rates

Please advise.

Thanks.

#2

In current rate method all the assests and liablities are tranlated at current rate.

However the components of Equity ie Common stock and retained earnings are not translated at current rate.

This leads to differnces.

#3

I understand that part. But the point is that it is a pure balance sheet ratio and will still be different as opposed to what they are saying that the BS ratios will remain the same.