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The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Actual results Budgeted results Previous yearIndustry average Current

The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008:

Actual results

Budgeted results

Previous yearIndustry average

Current ratio1.971.921.871.92

Quick asset ratio1.061.061.061.11

Inventory turnover4.214.914.864.76

Net profit ratio0.050.030.030.03

Gross margin0.650.590.610.61

Required:

Provide four (4) possible explanations for the results for the various ratios for Solar Ltd and outline their implications for the audit.

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