Ratio changevery hardFree question
A debt:equity position moves from 30:40 to 36:44. What is the percentage change in the ratio?
A-9.10
B20.0
C6.80
D8.30
E9.10
Worked solution
Compute the ratio for each period, then the percentage change between the ratios: (r₂ − r₁) ÷ r₁. The correct answer is 9.10. Traps to avoid: -9.10 comes from the "sign flipped" error; 20.0 comes from the "numerator change only" error; 6.80 comes from the "absolute ratio change" error; 8.30 comes from the "wrong base" error.
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