CASE 4 AND 5 FIVE-YEAR FINANCIAL DATA FOR COMPANY A YEAR 2 YEAR 3 YEARS YEAR 4 $137,812.50 Sales $206,718.75 YEAR 1 $100,000.00 75,000.00 25,000.00 COGS $105,000.00 78,750.00 26,250.00 $110,250.00 82,687.50 27.562.50 66,150.00 59,535.00 Margin 71,662.50 147,183.75 Perform a horizontal analysis of this balance sheet more of its overdue bills from customers. It turns out and identify any accounts that may be questionable. that the subsidiary told many customers to transfer their Take into account technology industry trends when contracts to third parties. The third parties then took out performing the analysis. bank loans, for which the company provided collateral, and then "paid" the overdue bills to the company using Case 4 the borrowed money. The result was that the company Perform horizontal analysis of the data in the previous was paying itself. When the contracts were later can table to indicate any potential red flags regarding pos celed, the company paid "penalties to the customers sible overstatement of sales. and the third parties to compensate them for the incon- venience of dealing with the auditors." Case 5 The investigators also found that the bulk of the Perform vertical analysis of the data in the previous company's sales came from contracts signed at the table to indicate any potential red flags regarding end of quarters so managers could meet ambitious possible understatement of the COGS quarterly sales targets and receive multimillion dollar bonuses. For example, 90 percent of the revenue