1. Using the financial statement data provided, complete the following assignments:a. Deseribe any symptoms of fraudb. Draw a conclusion about frand predication and recommend next steps.2. Assume that industry ratios were derived from a reputable source. Compute the year 1 and year a ratios for Alpha and Omega:Alpha CompanyОтеgа CompanуIndustryRatiosYear i Year a Industry Year i Year aCurrent Ratio0.64L150.63 0.64LISDebt-to-Assets Ratio0.600 o.6580.6a5Return on Assets10%10%20%s0%61%Gross MarginSRNOperating Cash Flow/Income1as125NDupont Expression RatiosRisk-Aasets-to-Equity2.502.922.752.502432.75Revenue Generation-Asset Turn 1.201.29125L20Profits-Profit Margin8%Return on Equityas3. Using your caleulated ratios from asignment a in concert with the metries caleulated in assignment , complete the following aignmentsa. Describe any symptoms of fraudb. Combine the findings in the ratio analysis with the metries caleulated in assignment i and draw a concluion about fraud predicationand recommend next steps.4. Assume that nonfinancial metrics were derived from reliable public and internal sources. Complete the analysis of NFMS for Alpha andOmega:Alpha CompanyОтера CompanyAnalysis of Nonfinancial Metries Year1 Year a Analysis Year i Year aAnalysisRetal Square Footage57.000 105.00084%57,000 105,00084%Employees1140 2,075L140 2,075Store Locations9517079%9517079N5. Using your caleulated metrics from assignments 1 an 2 in concert with the metrics caleulated in assignment 4, complete the followingassignments:a Describe any symptoms of fraadb. Combine the findings in the NFMS with the ratio analysis computed in assignment a and percentages calculated in assignment i anddraw a conclusion about fraad predication and recommend next steps. Assume that Alpha and Omega compete in the same four-digit SIC code industry and offer comparable products and services. The followingtable contains their reported financial performance and condition for the last two years:Alpha CompanyOmega CompanyBalance SheetYear 1 Year 2 Analysis Year 1 Year 2AnalysisAssets-Cash25048092%25048092%Assets-Accounts Receivable25033032%250530112%Assets-Long-Term50090080%50090080%Assets1,0001,71071% 1,0001,91091%Liabilities-Current40075088%40075088%Liabilities-Long-Term20037588%88%200375Liabilities6001,12588%6001,12588%Stockholders' Equity40058546%40078596%Liabilities and Stockholders' Equity 1,0001,71071% 1,0001,91091%Income StatementRevenues1,200 2,20o83% 1,200 2,400100%Costs of Goods Sold50092585%50092585%Gross Profit7001,27582%7001,475111%60082%6001,09082%Operating ExpensesOperating Income1,09018585%385285%100100Statement of Cash Flows85%385285%Operating IncomeDepreciation Operating CashOperating Cash Flows100185100254580%25-155-720%12523084%12523084%

Fraud is a misleading conduct committed with the goal of gaining an illegal advantage for the…

2. Assume that industry ratios were derived from a reputable source. Compute the year i and year a ratios for Alpha Alpha Company Omega Com Ratios Year i Year a Industry Year i Year a Industry Current Ratio 0.64 LIS 0.64 LIS Debt-to-Asets Ratio adas Return on Asets so so 20% Gross Margin SAN SAN Operating Cash Flow/Income Dupont Expresaion Ratios 1as a as 6o Risk-Asets-to-Equity 250 2.92 2.75 250 243 2.75 Revenue Generation-Aset Tun L20 129 Las 26 Profits-Profit Margin Return on Equity as as 4 3 Uing your caleulated ratios from asignment a in concert with the metries caleulated in aignmentcomplete the a Deseribe any symptoms of fraud igmentand drewa cnclusional

2. Assume that industry ratios were derived from a reputable source. Compute the year i and year a ratios for Alpha Alpha Company Omega Com Ratios Year i Year a Industry Year i Year a Industry Current Ratio 0.64 LIS 0.64 LIS Debt-to-Asets Ratio adas Return on Asets so so 20% Gross Margin SAN SAN Operating Cash Flow/Income Dupont Expresaion Ratios 1as a as 6o Risk-Asets-to-Equity 250 2.92 2.75 250 243 2.75 Revenue Generation-Aset Tun L20 129 Las 26 Profits-Profit Margin Return on Equity as as 4 3 Uing your caleulated ratios from asignment a in concert with the metries caleulated in aignmentcomplete the a Deseribe any symptoms of fraud igmentand drewa cnclusional

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter24: Analysis Of Financial Statements

Section: Chapter Questions

Problem 3SEB

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