Assume that translated U.K. earnings are $100 and U.S. earnings are $120. The index of conservatism is

Name: Assume that translated U.K. earnings are $100 and U.S. earnings are $120. The index of conservatism is
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The index of conservatism is calculated as the ratio of translated U.K. earnings to U.S. earnings, which is $100/$120 = 0.833 (rounded to .800 for simplicity). Since the ratio is less than 1, it indicates that the U.K. earnings are more conservatively reported compared to the U.S. earnings.

Assume That Translated U