Seasonality is introduced into financial ratios by averaging monthly account balances,and thus it is recommended that ending account balances be used.

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Seasonality is introduced into financial ratios by averaging monthly account balances. Using ending account balances does not eliminate seasonality because the ending balance of a particular month may be higher or lower due to seasonal factors. Instead, adjustments such as seasonal indexing or using a 12-month rolling average can be made to account for seasonality.

Seasonality Is Introduced into Financial Ratios by Averaging Monthly Account