I did the data analysis. Need to draw a conclusion about fraud prediction and recommend the next steps.
Income Statement Revenues 1200 2200 83% 1200 2400 100% Costs of Good Sold 500 925 85% 500 925 85% Gross Profit 700 1275 82% 700 1475 111% Operating Expenses 600 1090 82% 600 1090 82% Operating Income 100 185 85% 100 385 285% Statement of Cash Flows Operating Income 100 185 85% 100 385 285% Depreciation * Operating Cash 25 45 80% 25 -155 -720% Operating Cash Flows 125 230 84% 125 230 84%1. Assume that industry ratios were derived from a reputable source. Compute the year 1 and year 2 ratios (see table below) for Alpha and Omega: Alpha Company Omega Company Ratios Calculate Calculate Industry Calculate Calculate Industry Current Ratio 1.15 1.15 Debt-to-Assets 0.625 0.625 Ratio Return on Assets 10% 10% Gross Margin 58% 58% Operating Cash 125% 125% Flow / Income Dupont Expression Ratios Risk - Assets-to- 2.75 2.75 Equity Revenue Generation - Asset 1.25 1.25 Turn Profits - Profit 8% 8% Margin Return on Equity 27% 27%1. Analysis of Cash Flows, Nonfinancial Numbers and Ratios Alpha Company Omega Company Analys Analys Balance Sheet Year 1 Year 2 is Year 1 Year 2 IS Assets - Cash 250 480 92% 250 480 92% Assets - Accounts Receivable 250 330 32% 250 530 112% Assets - Long-term 500 900 80% 500 900 80% Assets 1000 1710 71% 1000 1910 91% Liabilities - Current 400 750 88% 400 750 88% Liabilities - Long-term 200 375 88% 200 375 88% Liabilities 600 1125 88% 600 1125 88% Stockholders Equity 400 585 46% 400 785 96% Liabilities and Stockholders Equity 1000 1710 71% 1000 1910 91% Income Statement Revenues 1200 2200 83% 1200 2400 100% Costs of Good Sold 500 925 85% 500 925 85% Gross Profit 700 1275 82% 700 1475 111% Operating Expenses 600 1090 82% 500 1090 82% Operating Income 100 185 85% 100 385 285% Analysis of Statement of Cash Flows Operating Income 100 185 85% 100 385 285% Depreciation * Operating Cash 25 45 80% 25 -155 -720% Operating Cash Flows 125 230 84% 125 230 84% Alpha Company Omega Company Calculat Calculat Industr Calculat Calculat Industr Ratios y e Current Ratio 0.63 0.64 1.15 0.63 0.64 1.15 Debt-to-Assets Ratio 0.600 0.658 0.625 0.600 0.589 0.62 Return on Assets 10% 11% 10% 10% 20% 10% Gross Margin 58% 58% 58% 58% 61% 58% Operating Cash Flow / Income 125% 124% 125% 125% 60% 125% Dupont Expression Ratios Risk - Assets-to-Equity 2.50 2.92 2.75 2.50 2.43 2.75Revenue Generation - Asset Turn 1.20 1.29 1.25 1.20 1.26 1.25 Profits - Profit Margin 8% 8% 8% 3% 16% 3% Return on Equity 25% 32% 27% 25% 49% 27% Alpha Company Omega Company Analys Analys Analysis of NonFinancial Metrics Year 1 Year 2 is Year 1 Year 2 is Retail Square footage 57,000 105,000 84% 57,000 105,000 84% # Employees 1,140 2,075 82% 1,140 2.075 82% # store locations 95 170 79% 95 170 79% 2
