The following information was taken from the annual report of Sega-Venus Enterprises.
![549_f59b418e-8dd1-44a4-9d8c-2da40c725b1c.png](https://secure.tutorsglobe.com/CMSImages/549_f59b418e-8dd1-44a4-9d8c-2da40c725b1c.png)
a. Compute Sega-Venus's conservatism ratio, and comment on how conservative the company's reporting methods are.
b. Explain why the conservatism ratio provides a measure of the extent to which a company's financial accounting methods are conservative, and provide examples of accounting treatments that may increase or decrease the ratio.