I feel it is not consistent in some of the answers shown in Schweser, CFAI and other learning material, some time the ratio is computed using average value but some time just the annual value. For example, Return on total asset, some time total asset is just the year end total asset but other time they use average value of this year end and last year end number. I am very confused, anyone here shed some light on which ratio we need to use average values?
When you’re computing a pure Balance Sheet or pure P&L ratio, there’s no need to use any averages (except in the BS accruals ratio). When you’re calculating a ratio across the Balance Sheet and P&L (asset turnover, inventory turnover, etc.) then use the average balance sheet figure if you’re given it.