CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 36 Discussion

AB and CDare separate entities that preparefinancial statements to 31 Mayusing international accounting standards. AB and CDprovidetechnical supportservices to the financial services industry and operate in the same country. The financial statements are identical except for the following:

* ABpurchased alloperatingequipment, paying $100,000,using a 5 year bank loan. The useful life of the equipmentwas 5 years.

* CDsigned an operating lease agreement for alloperatingequipment for 5 years paying $20,000peryear.

Bothentities charge all expenses relating tothe equipment to cost of sales.

From the information provided, whichof the following ratios wouldbereliablycomparable for AB and CD?