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Question - During analytical procedures it was observed that several of operating cycle ratios had changed materially since last year's audit as follows:
2020
2021
Current ratio
1.3:1
1.9:1
Liquid ratio
0.8:1
0.6:1
Days Debtors outstanding
52 days
69 days
Inventory turnover
79 days
123 days
Besides, it was found that the company had doubled their overdraft limit to provide working capital and that this limit had been exceeded twice during the year, just before the company had paid an interim dividend and just before a final dividend of 5% because the company is short of cash.
The company's gearing ratio had significantly increased as a result of a £3 million long-term loan from their bankers to finance a major capital project. The project was partly financed from internal sources, but the issued capital of the company remained unchanged at two million £1 shares, fully paid.
Required -
a) Assess the level of audit risk associated with this situation.
b) Recommend appropriate audit procedures aimed at ascertaining the position of the client as a "going concern".
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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