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This is the question. The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Actual Budgeted Previous year

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The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Actual Budgeted Previous year Industry results results average Current ratio 1.97 1.92 1.87 1.92 Quick asset ratio 1.06 1.06 1.06 1.11 Inventory turnover 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 Required: Provide possible explanations for the results for the various ratios for Nova Lid and outline their implications for the audit

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