Following are the auditor's calculations of several key ratios for Cragston Star Products. The primary purpose of
Question:
a. What major conclusions can be drawn from this information about the company's future?
b. What additional information would be helpful in your assessment of this company's financial condition?
c. Based on the preceding ratios, which aspects of the company do you believe should receive special emphasis in theaudit?
1 earned 4. Accounts receivable turnover 5. Days to collect receivables 6. Inventory turnover 7. Days to sell inventory 8. Net sales divided by tangible assets 179.80 98.37136.19 109.28 108.63 10. Return on assets 11. Return on equity 12. Earnings per share $4.30 $4.26 $4.49 $4.26 $4.14
Step by Step Answer:
a The companys financial position is deteriorating significantly The companys ability to pay its bills is marginal quick ratio 097 and its ability to ...View the full answer
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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