When comparing income statement items to balance sheet items in a single ratio, we use the average of the items on the balance sheet.

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When comparing income statement items to balance sheet items in a single ratio, it's common practice to use the average of the balance sheet items (e.g., beginning and ending balances) for the period, because balance sheet items represent a point in time, while income statement items represent activity over a period of time. This helps provide a more accurate and meaningful comparison.

When Comparing Income Statement Items to Balance Sheet Items in a Single