Resolved: Calculating Ratios Discrepancies
Team, when analyzing the same Rations with Ned (DSO, DIO & DPO) Ned Used 360 days but Antoniya Uses 365
Also Antonya uses an average of 2 years when calculating such metrics that includes items of the BS but Ned uses just the last picture of the BS Value, what is the correct approach ?
2 answers ( 1 marked as helpful)
Hi Sebastian,
Both approaches work in practice; it depends on how you define the specifics.
I would say that in finance, sometimes you need to make rough estimates to reduce complexity, so there is some flexibility in definitions. However, it's important to use the same conventions year-on-year so that you don't compromise comparability.
Best,
Antoniya
Both approaches work in practice; it depends on how you define the specifics.
I would say that in finance, sometimes you need to make rough estimates to reduce complexity, so there is some flexibility in definitions. However, it's important to use the same conventions year-on-year so that you don't compromise comparability.
Best,
Antoniya
Understood, Thank you.