Based on the results of your vertical and horizontal analysis, identify at least three of the more significant analytical anomalies and indicate why these are of concern to you. (What potential fraud might exist?)

Jane Doe Company Vertical Analysis of Income Statement For the Periods Ending December 31, 2020 and 2019 2020 Percent of Sales 2019 Percent of Sales $ $ Sales Less: Sales Returns Net Sales Cost of Goods Sold Gross Margin 127,000,000 1,000,000 126,000,000 90,000,000 36,000,000 100.00% 0.79% 99.21% 70.87% 111,000,000 2,000,000 109,000,000 88,000,000 21,000,000 100.0096 1.80% 98.2096 79.28% 18.92% 28.35% Expenses Selling Administrative Bad Debt Expense Pension Contribution Interest Total Expenses Income Before Taxes Income Tax 9,500,000 6,000,000 500,000 2,000,000 500,000 18,500,000 17,500,000 8,000,000 9,500,000 7.4896 4.72% 0.3996 1.5796 0.3996 14.5796 13.7896 6.3096 7.4896 10,000,000 4,000,000 1,000,000 2,000,000 400,000 17,400,000 3,600,000 1,400,000 2,200,000 9.0196 3.6096 0.90% 1.80% 0.36% 15.6896 3.2496 1.2696 1.9896 Net Income $ Jane Doe Company Hortizontal Analysis of Balance Sheet December 31, 2020 and 2019 2020 2019 Difference Horizontal Analysis Cash 4,500,000 2,300,000 2,200,000 95.65% Accounts Receivable 5,800,000 1,200,000 4,600,000 383.33% Less: ADA (300,000) (150,000) (150,000) 100.00% Inventory 22,500,000 15,300,000 7,200,000 47.06% Prepaid Assets 500,000 100,000 400,000 400.00% Current Assets 33,000,000 18,750,000 14,250,000 76.00% Long-Term Investments 5,700,000 2,900,000 2,800,000 96.55% Furniture and Equipment 5,800,000 5,800,000 0.00% Less: Accumulated Depreciation (1,100,000) (1,000,000) (100,000) 10.00% Total Assets 43,400,000 $ 26,450,000S 16,950,000 64.08% Accounts Payable 21,000,000 17,500,000 $ 3,500,000 20.00% Pension Payable 2,100,000 (2,100,000) -100.00% Income Taxes Payable 6,400,000 1,300,000 5,100,000 392.31% Current Liabilities 27,400,000 20,900,000 6,500,000 31.10% Note Payable, 10%, 30yr 4,000,000 4,000,000 0.00% Total Liabilities 31,400,000 20,900,000 10,500,000 50.24% Commonstock 2,000,000 2,000,000 0.00% Retained Earnings 10,000,000 3,550,000 6,450,000 181.69% Total Liabilities & Equity 43,400,000 S 26,450,000S 16,950,000 64.08% Jane Doe Company Horizontal Analysis of Income Statement For the Periods Ending December 31, 2020 and 2019 2020 2019 Difference $ Sales Less: Sales Returns Net Sales Cost of Goods Sold Gross Margin $ 127,000,000 1,000,000 126,000,000 90,000,000 36,000,000 $ 111,000,000 2,000,000 109,000,000 88,000,000 21,000,000 16,000,000 (1,000,000) 17,000,000 2,000,000 15,000,000 Horizontal Analysis 14.41% -50.00% 15.60% 2.27% 71.43% (500,000) 2,000,000 (500,000) Expenses Selling Administrative Bad Debt Expense Pension Contribution Interest Total Expenses Income Before Taxes Income Tax Net Income 9,500,000 6,000,000 500,000 2,000,000 500,000 18,500,000 17,500,000 8,000,000 9,500,000 | $ 10,000,000 4,000,000 1,000,000 2,000,000 400,000 17,400,000 3,600,000 1,400,000 2,200,000 100,000 1,100,000 13,900,000 6,600,000 7,300,000 -5.00% 50.00% -50.00% 0.00% 25.00% 6.32% 386.11% 471.43% 331.82% | $ $