Essay Analytical Procedures

953 Words Aug 22nd, 2011 4 Pages
The objective of analytical procedures used in the overall review stage of the audit is to assist the auditor in assessing the conclusions reached and in the evaluation of the overall financial statement presentation. A wide variety of analytical procedures may be useful for this purpose. The overall review would generally include reading the financial statements and notes and considering (a) the adequacy of evidence gathered in response to unusual or unexpected balances identified in planning the audit or in the course of the audit and (b) unusual or unexpected balances or relationships that were not previously identified. Results of an overall review may indicate that additional evidence may be needed. [Paragraph renumbered by the …show more content…
Debt to Equity Ratio Industry Average
total liabilities = $ 7,589,482.00 = $ 0.80 2.58
total stockholder's equity $ 9,520,580.00




Gross Margin on Net Sales
Gross Profit = $ 7,287,064.00 = $ 0.28 23.11%
Net Sales $ 26,420,363.00

Current Ratio
Current Assets = $ 16,513,545.00 = $ 2.18 1.21
Current Debt $ 7,589,482.00

Conclusion:

Based on the end of the audit analysis, I believe this business will continue in business. The debt to equity ratio tells me the business isn’t heavily financed by shareholders’. For every dollar of OceanView Marine Company owned by shareholders, OceanView owes $0.80 to creditors. The ratio is low compared to the industry average and may indicate the company is not taking advantage of other opportunities that financial leverage may bring. The gross margin on net sales ratio is high compared to the industry average. This ratio reveals how much a company earns taking into consideration the costs that it incurs for producing its products and or services. Higher ratios indicate the company may have more money left over to spend on other business operations. The current ratio is higher than the industry average as well. This is also good because the ratio is mainly used to give an idea of the company’s ability to pay back short-term liabilities with its short-term assets.


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