The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Actual results Previous year Industry average Budgeted results 1.92 Current ratio 1.97 1.87 1.92 Quick asset ratio 1.06 1.06 1.06 1.11 Inventory turnover Net profit ratio Gross margin 4.21 4.91 4.86 4.76 0.05 0.03 0.03 0.03 0.65 0.59 0.61 0.61 Required: Provide possible explanations for the results for the various ratios for Solar Ltd and outline their implications for the audit.

The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Actual results Previous year Industry average Budgeted results 1.92 Current ratio 1.97 1.87 1.92 Quick asset ratio 1.06 1.06 1.06 1.11 Inventory turnover Net profit ratio Gross margin 4.21 4.91 4.86 4.76 0.05 0.03 0.03 0.03 0.65 0.59 0.61 0.61 Required: Provide possible explanations for the results for the various ratios for Solar Ltd and outline their implications for the audit.

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter2: Audits Of High-risk Accounts

Section2.3: Take-two Interactive Software, Inc.

Problem 1Q

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