Audit, Assurance and Compliance

Week 5 The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Actual Budgeted Previous year Industry average results results Current ratio 1.97 1.92 1.87 1.92 Quick asset ratio 1.06 1.06 1.06 1.11 Inventory turnover 4.21 4.91 4.86 4.76 Net profit ratio 0.05 0.03 0.03 0.03 Gross margin 0.65 0.59 0.61 0.61 Required: Provide four (4) possible explanations for the results for the various ratios for Solar Led and outline their implications for the audit. (10 marks)