Carinal Ltd$.$ specializes in the development of electronic components within quite a

competitive environment causing concerns for marketing and pricing. Its non$-$current assets

primarily include IT software, property, and investments, and there have been additions to

these during the year.

As audit manager, you are conducting a preliminary analytical review and associated risk

analysis for this client for the year ended June $302022.$ You have been presented with the

following draft financial information about Carinal with incomplete ratios and percentages

calculation.

INCOME STATEMENT

Year ended June $30$

$20222021$

$$\text{'}000$ $$\text{'}000$

Revenue $2245018675$

Cost of sales $84758055$

Gross Profit $1397510620$

Distribution costs $42453120$

Administrative expenses $12762134$

Selling expenses $5555512$

Profit from operations $28994854$

Net interest receivable $1245495$

Profit before tax $41445349$

Income tax expense $21452345$

Net profit $19993004$

Retained profits $13252105$

Dividends paid $$1250$ $$1049$

Accounting ratios and percentages

Earnings per share

Performance ratios include the following:

Gross margin $(($Gross profit$/$revenue$)$

Expenses as a percentage of revenue:

Distribution costs

Administrative expenses

Selling expenses

Operating profit as a percentage of revenue

Part A

Required

$054$

$?$

$?$

$?$

$?$

$?$

$125$

$?$

$?$

$?$

$?$

$?$

Part A

Required

$054$

$?$

$?$

$?$

$?$

$?$

$125$

$?$

$?$

$?$

$?$

$?$

$1.$ Using the information above, complete the calculation of accounting ratios and

percentages and comment briefly on the performance of the company for the two

years.

$2.$ By reference to requirement $1,$ identify the areas that are subject to increased audit

risk and describe the further audit work you would perform in response to those risks.