AB and CD are separate entities that prepare financial statements to 31 May using international accounting standards. AB and CD provide technical support services to the financial services industry and operate in the same country. The financial statements are identical except for the following:
• AB purchased all operating equipment, paying $100,000, using a 5 year bank loan. The useful life of the equipment was 5 years.
• CD signed an operating lease agreement for all operating equipment for 5 years paying $20,000 per year.
Both entities charge all expenses relating to the equipment to cost of sales.
From the information provided, which of the following ratios would be reliably comparable for AB and CD?
Submit