Perform ratio calculations for Brony's Bikes and review the results in comparison to prior years, industry standards and competitors to identify any areas of concern for the current year audit.

Bronys Bikes Planning Analytical Procedures

Use the Excel file 20X9 Analytic Procedures WP A_1_to_7 to perform preliminary analytical procedures for Bronys Bikes. The 20X9 Analytic Procedures file contains seven worksheets. Each workpaper (WP) is on a separate worksheet tab in the Excel file. The audit teams expectations are that there will be some growth over the prior year, the relationships among financial statement items will remain relatively stable, and Bronys Bikes ratios will be comparable to reported industry and Wheels 4U ratios.

WP A.1- Comparative income statements

WP A.2 - Sales and cost of goods soldby product line

WP A.3 - Comparative schedule of manufacturing overhead and operating expenses

WP A.4 - Inventories

WP A.5 - Budget vs Actual Income Statements (prepared by client - no calculations required)

WP A.6 - Comparative Common Sized Balance Sheets

WP A.7 - Wheels 4U Financial Statements 20X8 and 29X9 (These financial statements were obtained from Wheels website - no calculations required).

RATIO CALCULATION ASSIGNMENT

WP A.1 calculations have been performed for you to show the income statement components as a percentage of sales for each year presented. Continue on WP A.2, A.3, A.4, A.6 and A.7 and complete the yellow highlighted calculation cells needed in the current year to mirror those calculations performed over the financial statements for prior years. Having the current year data to compare will allow you to answer the upcoming questions.

A.2 calculate the cost per unit calculation as a percentage of sales price for 20X9 by product line.

A.3 calculate the components as a percentage of sales for 20X9

A.4 calculate the finished goods inventory turnover for 20X9 by product line AND calculate materials and purchased parts turnover for 20X9 by component

A.6 calculate the percentage of total assets for 20X9 AND the percentage of total liabilities and equity for 20X9. Then calculate the current ratio, quick ratio, times interest earned and return on stockholders equity. [Use exhibit 7.3 for the formulas if necessary]

A.7 calculate the ratios for Wheels-4-U to allow comparability to Bronys Bikes ratios.

RATIO ANALYSIS ASSIGNMENT

WP A.2 did a majority of the unit costs increase or decrease?

WP A.4 did all categories of inventory turnover increase or decrease? What about inventory quantities, did they increase or decrease?

WP A.5 was the sales variance favorable or unfavorable? What was the sales variance in millions?

A.6 compare the four ratios calculated at the bottom of the file with the provided industry averages. Are there any significant disparities between Bronys Bikes ratios and the industry averages?

Based on comparison of Bronys Bikes to Wheels-4-U what strengths and weaknesses do you see for Bronys Bikes over Wheels-4-U?

A.6-7 was Bronys Bikes gross profit higher or lower than Wheels 4U? Does the result surprise you, why or why not?

A.6-7 was Bronys Bikes quick ratio higher or lower than Wheels 4U?

Based on the calculations performed, comparison to prior years and industry standards are the audit teams original expectation met (described in the first paragraph above)? What items stand out that arent as expected, if any?