Describe any symptoms of fraud and draw a conclusion about fraud predication and recommend next steps. 2.

Describe any symptoms of fraud and draw a conclusion about fraud predication and recommend next steps.
 

 

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2. Assume that industry ratios were derived from a reputable source. Compute the year 1 and year 2 ratios for Alpha and Omega: Alpha Company Omega Company Year 1 Year 2 Industry Year 1 Year 2 Industry 0.63 0.64 0.63 0.64 1.15 0.600 0.658 0.600 0.589 0.625 10% 11% 10% 20% 10% 58% 58% 61% 58% 124% 125% 60% 125% Ratios Current Ratio Debt-to-Assets Ratio Return on Assets Gross Margin Operating Cash Flow/Income Dupont Expression Ratios Risk-Assets-to-Equity Revenue Generation-Asset Turn Profits-Profit Margin Return on Equity 58% 125% 2.50 2.92 1.20 1.29 8% 8% 25% 32% 1.15 0.625 10% 58% 125% 2.75 1.25 8% 27% 2.50 2.43 1.20 1.26 8% 16% 25% 49% 2.75 1.25 8% 27% 2. Assume that industry ratios were derived from a reputable source. Compute the year 1 and year 2 ratios for Alpha and Omega: Alpha Company Omega Company Year 1 Year 2 Industry Year 1 Year 2 Industry 0.63 0.64 0.63 0.64 1.15 0.600 0.658 0.600 0.589 0.625 10% 11% 10% 20% 10% 58% 58% 61% 58% 124% 125% 60% 125% Ratios Current Ratio Debt-to-Assets Ratio Return on Assets Gross Margin Operating Cash Flow/Income Dupont Expression Ratios Risk-Assets-to-Equity Revenue Generation-Asset Turn Profits-Profit Margin Return on Equity 58% 125% 2.50 2.92 1.20 1.29 8% 8% 25% 32% 1.15 0.625 10% 58% 125% 2.75 1.25 8% 27% 2.50 2.43 1.20 1.26 8% 16% 25% 49% 2.75 1.25 8% 27%