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without explanation but calculations Horizontal Analytical Procedures Baumholder & Barbar, CPAs, audited the consolidated financial statements of Aladdin Company ( a nonissuer ) for the
without explanation but calculations Horizontal Analytical Procedures
Baumholder & Barbar, CPAs, audited the consolidated financial statements of Aladdin Company a nonissuer for the year ended December Year and expressed a qualified opinion.
Baumholder & Barbar also audited Aladdin's financial statements for the year ended December Year and is worried they may have to express a modified opinion as Aladdin appears to be having a major problem keeping its bills paid and its inventory sold. The following consolidated financial statements were presented on a comparative basis with those of the prior year.
Aladdin, Co
Comparative Balance Sheets
December Year and Year
Year Year
Assets
Current assets
Cash and cash equivalents $ $
Receivables
Inventory
Prepaids
Total current assets
Property, plant, and equipment net
Other assets
Total assets $ $
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ $
Current portion of longterm debt
Total current liabilities
Longterm debt
Total liabilities
Stockholders' equity
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity $ $
Cost of goods sold for Year and Year is $ and $ respectively. Average inventory for Year is $
Part :
You are the assistant on the engagement. The engagement supervisor is worried that Aladdin is not a going concern and has asked you to calculate the following ratios. He has also asked you to analyze the ratios.
In the table below, calculate the following ratios using the information above. Round to the nearest decimal place eg
Year Year Industry
Standard
AcidTest Ratio
Current Ratio
Inventory Turnover
DebttoEquity Ratio
Equity Ratio
A horizontal analysis involves a review of the clients ratios and trends over time. Specifically, the auditor is looking at change over time. In the table below, select the correct answer for each question.
Question Answer
The horizontal analysis of the acidtest ratio would most likely tell you what?
The horizontal analysis of the current ratio would most likely tell you what?
The horizontal analysis of the inventory turnover ratio would most likely tell you what?
The horizontal analysis of the debttoequity ratio would most likely tell you what?
The horizontal analysis of the equity ratio would most likely tell you what?
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