What may have contributed to the change in the expense ratio? (A) Increase in cash (B) Increase in purchases (C) Decrease in drawings (D) Decrease in interest rates - HSC - SSCE Business Studies - Question 14 - 2007 - Paper 1

An increase in purchases could lead to a higher expense ratio. If the cost of goods sold rises without a corresponding increase in revenue, this can significantly impact the expense ratio.

A decrease in drawings may contribute to a more favorable expense ratio as it indicates that fewer profits are being withdrawn for personal use, thus retaining more earnings within the business.

A decrease in interest rates can also positively affect the expense ratio by lowering interest expenses. If a business has less debt or lower cost of borrowing, it can lead to reduced expenses overall.