Extracts from ABC's annual income statements and balance sheets for the years 2019 & 2020 are...

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Extracts from ABC's annual income statements and balance sheets for the years 2019 & 2020 are as follows: Sales PPE - year end balance 2019 $ Millions 1,000 2,100 2020 $ Millions 1,100 2,900 - Required 1. What ratio can you use here to determine possible fraudulent capitalization of expenses as PPE or other Assets? Explain why? (2 marks) 2. Calculate and analyze on the ratios for 2019 & 2020. Should your findings alarm investors? Explain (2 marks) 3. Can you think of one reason why the ratio you calculated in (2) above may not give the true picture of the ratio throughout the quarters? (2 marks) Extracts from ABC's annual income statements and balance sheets for the years 2019 & 2020 are as follows: Sales PPE - year end balance 2019 $ Millions 1,000 2,100 2020 $ Millions 1,100 2,900 - Required 1. What ratio can you use here to determine possible fraudulent capitalization of expenses as PPE or other Assets? Explain why? (2 marks) 2. Calculate and analyze on the ratios for 2019 & 2020. Should your findings alarm investors? Explain (2 marks) 3. Can you think of one reason why the ratio you calculated in (2) above may not give the true picture of the ratio throughout the quarters? (2 marks)

Answer rating: 100% (QA)

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