Maurice Tutor

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About Maurice Tutor

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Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 402 Weeks Ago, 3 Days Ago
Questions Answered: 66690
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 04 Aug 2017 My Price 13.00

calculations of key ratios

The following are your calculations of key ratios for your current audit client. Based on these ratios, answer the questions below.

Ratio

2015

2014

2013

Current Ratio

2.08

2.26

2.51

Quick Ratio

0.97

1.34

1.82

Days to Collect Accounts Receivable

86.90

66.36

89.02

Days to Sell Inventory

179.80

198.37

136.19

Total Days to Convert Sales to Cash

266.70

264.73

225.21

Profit Margin

13%

14%

16%

Return on Assets

9%

9%

12%

What is your assessment of the overall financial health and immediate future prospects for your client? Be sure to explain your position.

Hint - You need to take a holistic approach here to try to assess the firm's prospects for the next year or two. Consider both cash management and operating performance issues. Firms need to generate profits but also need to be able to turn those profits into cash to pay their bills. Keep in mind that the standard rule of thumb level for the current ratio is 2.0 and 1.0 for the quick ratio.

List three additional pieces of information that you would find useful to improve your assessment of the firm's future prospects and explain why you would include them.

Hint - Step back and think about what the issues you discussed above imply and what information you could use to refine your assessments. For example, if you detected cash flow problems above, then consider what uses of cash they might face in the future that might be threatened by weak cash flows.

Additional Information 1 -

Additional Information 2 -

Additional Information 3 -

Based on the information, discuss two accounts or related groups of accounts, or other issue might warrant further audit investigation and why.

Hint - I am looking for a demonstration of you understanding of how these ratios relate to account balances as well as how the overall picture might create audit issues. However, I want your explanation to focus on an audit issue and specific risk of material misstatement in the financial statements or affect your audit report. For example, falling profits are an operating issue. However, they can do things like put pressure on management to manipulate the financial statements to hide the operating weakness or may signal a going concern risk.

Audit Issue 1 -

Audit Issue 2

Answers

Maurice Tutor
(5)
Status NEW Posted 04 Aug 2017 11:08 PM My Price 13.00

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