The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008:
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Question:
The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008:
Ratio- Actual results Budgeted results Previous year Industry average
Current ratio 1.97 1.92 1.87 1.92
Quick ratio 1.06 1.06 1.06 1.11
Inventory ratio 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
Provide four (4) possible explanations for the results of the various ratios for Nova Ltd and explain their implications for the audit
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