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Student MAULIK
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Student e- EGU8594@my.holmes.edu.au
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Auditing and Assurance
INTRODUCTION
reports. Ratios and trends that may affect audit planning. They include a
previous year's balances, adjusted for any increase or decrease in sales and
operating costs are too high. When calculating financial ratios, a clear
Examining these proportions over time gives an idea of how effective the
Here are the most critical ratios for Double Ink Printers Ltd (DIPL)
The financial ratio is a valuable statement and easy to interpret in the data.
between the number of spreadsheets. This can help you answer key
questions such as whether the company pays too much debt or inventory,
that the customer is paying according to the terms and conditions and
whether the operating costs are too high. When calculating the financial ratio,
company. With the passage of time to examine these proportions, you can
can be calculated.
Liquidity
It measures the ability of a company to pay its debts to maturity. There are
Current ratio- Determines how the company uses only current assets to
pay current liabilities. Also called working capital ratio. The general rule for
the current ratio is 2 to 1 (or 2: 1 or 2/1). Real quality and asset management
Quick ratio - This ratio has declined in 2015 and is well below the usual
has increased during this period (deducted from the "receivables" ratio). It
would be useful to review the company's cash flow for more information on
Current Liabilities
2. safety
means that the company faces the risk of vulnerability - that is, the degree of
security:
Debt equity ratio - It quantifies the relationship between the owner and the
investment capital of the investor and the funds provided by the creditor. The
higher the proportion, the greater the risk of current or future creditors. The
higher the ratio, the higher the risk is high for a current or future creditor. This
relationship has increased over the three years, indicating the company's
more debts. The higher the proportion, the greater the ability of the company
to pay for interest or debt. this means that the company earns more than
enough money to pay its interest bonds with some additional earnings
Interest expense
Gross profit margin - Indicates how the company can generate a return on
gross profit. It addresses three areas: inventory control, price and production
efficiency. This indicates that the company can use a larger discount to
generate sales.
Gross Profit
Total Sales
Net profit margin - shows that the net result is calculated from the total
amount of each sale. This shows how the operating costs of the business. It
is also possible to emphasize whether the company has sufficient sales to
cover the minimum fixed costs and even the acceptable profits.
Net Profit
Total Sales
be more favorable to investors, since it shows that the company manages its
assets more efficiently to produce higher returns. A positive ROA ratio also
Total assets
real estate, savings, etc.). There must not be a indirect relationship between
Net Profit
Net Worth
4 Efficiency
It assesses the extent to which the company manages
decrease ratio, similarly, can also suggest some elements about a business,
such as the company may have poor collection process, poor credit policy
decline ratio may also mean that if the company improves its collection
of its various debtors. In general, however, the decrease ratio means that
the company needs to re-evaluate its credit policy to ensure the timely
to collect all debtors. With respect to the income received (above), Fewer
days mean that the company get their income in very quick time.This
proportion has increased considerably over the three years. This may
indicate greater leniency in terms of credit to try to generate sales. This may
365 Days
Receiveable tuyrnover in 365 days 327 days 451 days 531 days
The risks identified are primarily related to operating costs and inventory
costs. These costs affect the company's financial factors and may be
therefore involve risks. The negotiations defined in the scenario are in AUS
dollars and the import and export procedures, counting foreign currencies,
have a very significant monetary impact. The exchange rate change can be
considered as one of the main sources of financial losses and can lead to an
Question 2
Economic and financial risks are very effective in the company and can result
in significant losses for the company. The cost of transporting raw materials
and other equipment can also affect commercial costs. The cost of selling
the property will increase and affect the overall commercial economy. Thus,
problems can result in the addressing of audit risk. (Selisteanu, Florea, &
Buziernescu, 2015).
The inherent risk may be information about the importance of disclosure,
Pearson, & Churyk, 2014). The risk of control may be based on the risk of
slow cash flows and business risk associated with the liquidity of Dipl's
transactions.
Question 3
The risk here would have been related to the Existing of the facility and the
ownership of the equipment as the cost of revenue has been given priority
rather than cost in the reporting activity. (Blay & Geiger, 2012). This can
cause confusion because the auditor cannot determine the exact processing
This can be happen, for example, when there is a significant level of aging
the Company's financial factors for the qualified audit committee. The
company may even lack the internal audit service, which is a key control in
Audit risk
also responsible for describing the quality of annual reports and trade
publications. Analysis of the case study, the observation results show that
the two risks. As a result, the audit risk will arise from the determination of
less profit. In addition, the distinction between foreign currencies will straight
inventory and operational costs with the cost of gold sold because of global
audit risk may be the risk of risk function of detection and significant
anomalies (Weirich, Pearson, & Churyk, 2014). Auditor risk based on DIPL
false positives in the financial statements before auditing. They involve two
Reference
579-606. doi:10.1111/j.1911-3846.2012.01166.x
Independence?.
133-141.
Wan Ismail, W. A., & Kamarudin, K. A. (2016). Family Firms and Audit