Which one of the following statements is not true?

Conversion of debentures into preference shares will decrease debt-equity ration- True

1. The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.
2. Closely related to leveraging, the ratio is also known as risk, gearing, or leverage.
3. Conversion of debentures into preference shares will decrease the debt component and increase the equity component, which in turn will decrease the debt-equity ratio.

Long-term liabilities due for payment within a year should be treated as current liabilities- True

1. Current liabilities are a company's short-term financial obligations that are due within one year or within a normal operating cycle.
2. Thus, Long-term liabilities due for payment within a year should be treated as current liabilities.

A higher operating ratio indicates higher profits- False

1. The operating ratio shows the efficiency of a company's management by comparing the total operating expense of a company to net sales.
2. An operating ratio that is decreasing is viewed as a positive sign, as it indicates that operating expenses are becoming an increasingly smaller percentage of net sales.
3. If the operating ratio is increased, it indicates that the operating expenses have increased which results in lower profits.

Cost of sales is a better numerator than sales while calculating stock turnover- True.

1. Inventory turnover indicates the rate at which a company sells and replaces its stock of goods during a particular period.
2. The inventory turnover ratio formula is the cost of goods sold divided by the average inventory for the same period.