Inflation and balance sheet
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2-3. Comment on why inflation may restrict the usefulness of the balance sheet as normally presented.
2-4. Is there any validity in rule-of-thumb ratios for all corporations, for example, a current ratio of 2 to 1 or debt to assets of 50 percent?
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The solution comments on why inflation may restrict the usefulness of the balance sheet as normally presented.
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Inflation may restrict the usefulness of the balance sheet as normally presented because balance sheet does not take into account the effects of inflation on various items in the balance sheet, ...
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