Question

Can APS be greater than one? Give reasons in support of your answer.

Answer 1

APS can never be greater than one because APS is the ratio between total saving and total income $(\text{APS}=\frac{\text{S}}{\text{Y}})$. Total savings cannot be greater than total income during an accounting year. Savings is just a portion of income. We can say that if APS > 1, S must be greater than Y, in which case C must be negative which is not possible.