compare and provide summary analysis
here is an example summarize/analyze the increases and decreases
(f) Number of Days in Collection Number of days in collection: 2013-2012 (Bankrate-restated) 2013 2012 Changes in A/R tumover & DSO ratio Days in Year $360 $360 0 0 neutral A/R turnover 7.92 7.86 0.06 0.78% increase DSO Ratio 45.47 45.82 -0.35 -0.77% decrease Number of days in collection: 2012-2011 (Bankrate-restated) 2012 2011 Changes in A/R turnover & DSO ratio Days in Year $360 $360 0 0 neutral A/R turnover 7.86 7.95 -0.09 -1.13% decrease DSO Ratio 45.82 45.31 0.52 1.14% increase Analysis: (compare the restated with unrestated) ( Number of Days in Collection Number of days in collection: 2013-2012 (Lending Tree) 2013 2012 Changes in A/R turnover & DSO ratio Days in Year $360 $360 0 0 neutral A/R turnover 11.03 8.82 2.20 24.98% increase DSO Ratio 32.64 40.79 -8.15 -19.99% decrease Number of days in collection: 2012-2011 (Lending Tree) 2012 2011 Changes in A/R tumover & DSO ratio Days in Year $360 $360 0 0 neutral A/R turnover 8.82 11.80 -2.98 -25.23% decrease DSO Ratio 40.79 30.50 10.29 33.74% increase Analysis: (compare the Bankrate vs. Lending Tree) Bankrate.com - Example of Ratio Trend and Red Flag Analysis CR Current Ratio: 2013 2012 CR Changes in CA & CL Current Assets $308,924 3.70 $153.642 2.95 $155.282 101% increase Current Liab $ 83,461 $52,108 $31,353 60% increase *155,282/153,282 - 101% AND percent increase in the current ratio- 3.70-2.95 -25.4% ** 31,353/52,108 - 60% 2.95 Trend Analysis. The current ratio increased materially from 2012 to 2013 or by 25.4%. By itself, this is a positive for liquidity purposes. However, we must analyze what caused the cxorbitant increase in current assets of 101%. By review of the balance sheet we see the following: Cash increased by $146.5 million and accounts receivables increased by $9.4 million. Prepaid expense and deferred income tax increases and declines offset each other. Accordingly, most of the $155.3 million in increase in current liabilities was the result of the large increase in cash and over 20% increase in accounts receivables. By review of the cash flow statement we can see that most of the cash increase was due to (a) cash provided by operating activities of S105.3 million + (b) cash provided by financing activities of $74,4 million - (c) cash used in investing activities of S33.3 million. The foregoing results in a net increase to cash of $146.5 million for the year 2013. Increases in current liabilities should be analyzed similarly, Particularly here, as this case involved the defendants setting up unnecessary reserves and at other times reversing required accrued expenses. Red Flag analysis: Much of the increase in cash flows from operating activities was due to adding back of noncash charges. This is suspect given the GAAP accrual basis net income resulted in a loss for the year. Second, why the significant jump in accounts receivables? This is usually a red flag for revenue recognition fraud or accounts receivable skimming or larceny, particularly where, as here, revenues hardly changed from 2012. Could also be that the quality of the receivables is deteriorating As regards the restatements, which we will examine more in depth later, there were material adjustments to both current assets, current liabilities and cash flows, as a result of the alleged frauds of cookie jar reserves and premature revenue recognition. These types of frauds can (and did) affect the current ratios for the fraud years of 2013, 2012 and 2011. BTW: Why are you not using FinSas instead of Flexible? FinSas will calculate all the ratios for you so that you may check your calculations
