Refer to Exhibit, Identifying Risks at Koss Corporation Using Analytical Procedures. Review the analytical procedure results and
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CFO’s Likely
Financial Trend Explanation
Cash balances have declined to their lowest level since FYE 2004.
Sales increased over the period, but have returned to about FYE 2004 levels.
Cost of goods sold as a percentage of sales has risen sharply over the period, with a particularly significant increase from FYE 2008 to 2009.
Relatedly, gross profit has decreased sharply over the period, with a particularly significant decrease from FYE 2008 to 2009.
SG&A as a percentage of sales has risen sharply over the period, with a particularly significant increase from FYE 2008 to 2009.
Net income as a percentage of sales has decreased sharply over the period, with a particularly significant decrease from FYE 2008 to 2009.
Accounts receivable as a percentage of sales has remained relatively stable over the period, so there do not appear to be problems in billing or collections.
Current liabilities as a percentage of sales has remained relatively stable over the period, so there do not appear to be problems in the purchasing cycle.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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