Municipal bond analysts calculate a variety of ratios when analyzing the creditworthiness of governmental debt issuers. Many of these ratios include asset and liability amounts, such as assets divided by liabilities, liabilities divided by net position, and liabilities divided by revenues. What do you think the effect wason ratio analysis when governments implemented GASB Statement 65? Please explain your answer.

Main Question: What is the opinion on this student's response? Please see below.

GASB Statement 65 "established accounting and financial reporting standards that reclassify, outflows of resources or deferred inflows of resources, certain items that were previously assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities" (GASB 65).This statement is necessary as it accurately defines what assets, liabilities, and deferrals are to avoid further confusion.As I stated in the first discussion post from this week, I believe it's necessary to separate deferrals on financial reports because they are their own element as some net assets are recognized in future periods.This effects ratio analysis because now that every element is properly defined - from GASB 65 - ratios can be more accurate and precise.Prior to GASB 65, ratios could have been inconsistent as different governments will define and recognize deferrals differently, which could've caused confusion.Now analysts will have an easier time analyzing the ratios with the implementation of GASB 65 as they have a clearer picture of what to and what not to include.