You are the audit senior on the audit for the year ended 30 June 2020 of Gleam PTYLTD, a large manufacturer of lighting accessories.

This is the first year that your firm has performed Gleams audit. As part of the planning work, you have annualised Gleams interim financial accounts and performed analytical procedures on the annualised figures and compared the results to industry averages and last year's audited financial information.

The results of the ratio analysis undertaken as part of your preliminary analytical procedures are as follows:

Ratio	Industry Average		GLEAM PTY LTD
	2020	2019	2020	2019
Current Ratio	2.51	2.72	2.15	2.55
Net Profit Ratio	0.08	0.07	0.063	0.05
Gross Profit Ratio	0.24	0.29	0.24	0.21
Inventory Turnover Ratio	3.41	3.52	4.24	4.53
Receivables Turnover Ratio	6.02	5.81	6.38	7.17
Return of Total Assets	8.4%	6%	15%	11%

1. Provide a brief explanation of each of the above ratios. (5 marks)
2. For each ratio what conclusions can be drawn about Gleim's financial position? Consider the relative movements between each ratio and comparisons to the industry. (5marks)
3. Given the results in b) above, identify potential audit risks to be investigated further.

(5 marks)

Use the following table format to provide your response. [Answer here]

What does the ratio mean	Conclusions to be drawn	Risk to be investigated
Current ratio:
Net Profit Ratio:
Gross Profit Ratio:
Inventory Turnover Ratio:
Receivables Turnover Ratio:
Return on Total Assets: