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You are the Controller of a company that has recently been acquired by a larger organization. You and your team have been asked to provide a summary of the financial performance of your organization over the last five years. You have been provided with the liquidity, solvency and profitability ratios for the company to support and guide your analysis. Prepare a briefing in good professional form providing analysis for the trends observed in the five years. Comment on each of the groups of ratios and specific ratios for each of the years. Calculate and include any additional ratios you feel help support your analysis. Provide any recommendations of further investigation or action that you feel may be appropriate based on the ratio trends you see. Liquidity: 1 Current ratio 2 Inventory turnover (times) 3 Receivables turnover (times) Solvency: 4 Debt to total assets (%) 5 Debt to equity (%) Profitability: 6 Gross profit margin (% 7 Basic earnings per share 8 Price-earnings ratio (times) 9 Profit margin (%) 10 Asset turnover (times) 11 Return on assets (%) 12 Return on Equity (%) 2021 2.5 3.7 9.6 0.71 2.4 37.5 5.41 24.2 10.5 2.2 17.8 10.4 2020 2.0 3.5 8.9 0.69 2.2 38.1 5.56 21.6 10.9 2.2 18.1 10.5 2019 2.1 3.4 8.7 0.68 2.1 38.2 5.81 21.4 10.8 2.1 18.2 10.5 2018 1.9 3.6 8.5 0.66 1.9 38.7 5.14 20.8 10.1 1.9 17.2 9.9 2017 1.7 3.3 8.3 0.65 1.9 39.0 5.06 20.4 9.9 1.8 17.0 9.8 You are the Controller of a company that has recently been acquired by a larger organization. You and your team have been asked to provide a summary of the financial performance of your organization over the last five years. You have been provided with the liquidity, solvency and profitability ratios for the company to support and guide your analysis. Prepare a briefing in good professional form providing analysis for the trends observed in the five years. Comment on each of the groups of ratios and specific ratios for each of the years. Calculate and include any additional ratios you feel help support your analysis. Provide any recommendations of further investigation or action that you feel may be appropriate based on the ratio trends you see. Liquidity: 1 Current ratio 2 Inventory turnover (times) 3 Receivables turnover (times) Solvency: 4 Debt to total assets (%) 5 Debt to equity (%) Profitability: 6 Gross profit margin (% 7 Basic earnings per share 8 Price-earnings ratio (times) 9 Profit margin (%) 10 Asset turnover (times) 11 Return on assets (%) 12 Return on Equity (%) 2021 2.5 3.7 9.6 0.71 2.4 37.5 5.41 24.2 10.5 2.2 17.8 10.4 2020 2.0 3.5 8.9 0.69 2.2 38.1 5.56 21.6 10.9 2.2 18.1 10.5 2019 2.1 3.4 8.7 0.68 2.1 38.2 5.81 21.4 10.8 2.1 18.2 10.5 2018 1.9 3.6 8.5 0.66 1.9 38.7 5.14 20.8 10.1 1.9 17.2 9.9 2017 1.7 3.3 8.3 0.65 1.9 39.0 5.06 20.4 9.9 1.8 17.0 9.8
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Auditing The Art and Science of Assurance Engagements
ISBN: 978-0133405507
13th Canadian edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones
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