FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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1. Using the financial statement data provided, complete the following assignments:
a. Deseribe any symptoms of fraud
b. 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 Company
Отеgа Companу
Industry
Ratios
Year i Year a Industry Year i Year a
Current Ratio
0.64
L15
0.63 0.64
LIS
Debt-to-Assets Ratio
0.600 o.658
0.6a5
Return on Assets
10%
10%
20%
s0%
61%
Gross Margin
SRN
Operating Cash Flow/Income
1as
125N
Dupont Expression Ratios
Risk-Aasets-to-Equity
2.50
2.92
2.75
2.50
243
2.75
Revenue Generation-Asset Turn 1.20
1.29
125
L20
Profits-Profit Margin
8%
Return on Equity
as
3. Using your caleulated ratios from asignment a in concert with the metries caleulated in assignment , complete the following aignments
a. Describe any symptoms of fraud
b. Combine the findings in the ratio analysis with the metries caleulated in assignment i and draw a concluion about fraud predication
and recommend next steps.
4. Assume that nonfinancial metrics were derived from reliable public and internal sources. Complete the analysis of NFMS for Alpha and
Omega:
Alpha Company
Отера Company
Analysis of Nonfinancial Metries Year1 Year a Analysis Year i Year a
Analysis
Retal Square Footage
57.000 105.000
84%
57,000 105,000
84%
Employees
1140 2,075
L140 2,075
Store Locations
95
170
79%
95
170
79N
5. Using your caleulated metrics from assignments 1 an 2 in concert with the metrics caleulated in assignment 4, complete the following
assignments:
a Describe any symptoms of fraad
b. Combine the findings in the NFMS with the ratio analysis computed in assignment a and percentages calculated in assignment i and
draw a conclusion about fraad predication and recommend next steps.
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Transcribed Image Text:1. Using the financial statement data provided, complete the following assignments: a. Deseribe any symptoms of fraud b. 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 Company Отеgа Companу Industry Ratios Year i Year a Industry Year i Year a Current Ratio 0.64 L15 0.63 0.64 LIS Debt-to-Assets Ratio 0.600 o.658 0.6a5 Return on Assets 10% 10% 20% s0% 61% Gross Margin SRN Operating Cash Flow/Income 1as 125N Dupont Expression Ratios Risk-Aasets-to-Equity 2.50 2.92 2.75 2.50 243 2.75 Revenue Generation-Asset Turn 1.20 1.29 125 L20 Profits-Profit Margin 8% Return on Equity as 3. Using your caleulated ratios from asignment a in concert with the metries caleulated in assignment , complete the following aignments a. Describe any symptoms of fraud b. Combine the findings in the ratio analysis with the metries caleulated in assignment i and draw a concluion about fraud predication and recommend next steps. 4. Assume that nonfinancial metrics were derived from reliable public and internal sources. Complete the analysis of NFMS for Alpha and Omega: Alpha Company Отера Company Analysis of Nonfinancial Metries Year1 Year a Analysis Year i Year a Analysis Retal Square Footage 57.000 105.000 84% 57,000 105,000 84% Employees 1140 2,075 L140 2,075 Store Locations 95 170 79% 95 170 79N 5. Using your caleulated metrics from assignments 1 an 2 in concert with the metrics caleulated in assignment 4, complete the following assignments: a Describe any symptoms of fraad b. Combine the findings in the NFMS with the ratio analysis computed in assignment a and percentages calculated in assignment i and draw 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 following
table contains their reported financial performance and condition for the last two years:
Alpha Company
Omega Company
Balance Sheet
Year 1 Year 2 Analysis Year 1 Year 2
Analysis
Assets-Cash
250
480
92%
250
480
92%
Assets-Accounts Receivable
250
330
32%
250
530
112%
Assets-Long-Term
500
900
80%
500
900
80%
Assets
1,000
1,710
71% 1,000
1,910
91%
Liabilities-Current
400
750
88%
400
750
88%
Liabilities-Long-Term
200
375
88%
88%
200
375
Liabilities
600
1,125
88%
600
1,125
88%
Stockholders' Equity
400
585
46%
400
785
96%
Liabilities and Stockholders' Equity 1,000
1,710
71% 1,000
1,910
91%
Income Statement
Revenues
1,200 2,20o
83% 1,200 2,400
100%
Costs of Goods Sold
500
925
85%
500
925
85%
Gross Profit
700
1,275
82%
700
1,475
111%
600
82%
600
1,090
82%
Operating Expenses
Operating Income
1,090
185
85%
385
285%
100
100
Statement of Cash Flows
85%
385
285%
Operating Income
Depreciation Operating Cash
Operating Cash Flows
100
185
100
25
45
80%
25
-155
-720%
125
230
84%
125
230
84%
expand button
Transcribed Image Text:Assume that Alpha and Omega compete in the same four-digit SIC code industry and offer comparable products and services. The following table contains their reported financial performance and condition for the last two years: Alpha Company Omega Company Balance Sheet Year 1 Year 2 Analysis Year 1 Year 2 Analysis Assets-Cash 250 480 92% 250 480 92% Assets-Accounts Receivable 250 330 32% 250 530 112% Assets-Long-Term 500 900 80% 500 900 80% Assets 1,000 1,710 71% 1,000 1,910 91% Liabilities-Current 400 750 88% 400 750 88% Liabilities-Long-Term 200 375 88% 88% 200 375 Liabilities 600 1,125 88% 600 1,125 88% Stockholders' Equity 400 585 46% 400 785 96% Liabilities and Stockholders' Equity 1,000 1,710 71% 1,000 1,910 91% Income Statement Revenues 1,200 2,20o 83% 1,200 2,400 100% Costs of Goods Sold 500 925 85% 500 925 85% Gross Profit 700 1,275 82% 700 1,475 111% 600 82% 600 1,090 82% Operating Expenses Operating Income 1,090 185 85% 385 285% 100 100 Statement of Cash Flows 85% 385 285% Operating Income Depreciation Operating Cash Operating Cash Flows 100 185 100 25 45 80% 25 -155 -720% 125 230 84% 125 230 84%
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