The "apparent," but not necessarily the "true," financial position of a company whose sales are seasonal can change dramatically during a given year,depending on the time of year when the financial statements are constructed.

Question

Quizplus · Accepted Answer

Many of the ratios show sales over some past period such as the last 12 months divided by an asset such as inventories as of a specific date.Assets like inventories vary at different times of the year for a seasonal business,thus leading to big changes in the ratio.

The "Apparent," but Not Necessarily the "True," Financial Position of a Company