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Question - The ASX Company Bijou Electronics have reported sales problems over the last few years. Reduction in costing has been difficult due to Covid and the significant levels of imported inventory. All margins have reduced as a result. During this reporting period warranty claims on their strongest performing inventory item, the premium car battery tester, have been increasing. This has resulted in an increase from 7% of sales to 12% of sales. The problem relates to the copper wiring in the handheld tester which overheats and can spark up causing flames. The average cost to repair has risen by over 50% to $300 per warranty. The CEO of the company (your friend whom you went to university with) assured you they are not worried by this cost since each product retails for $2,999. The lenders are still willing to provide loan financing to Bijou as they expect better results next year in a post-Covid world and also this particular company pays a much higher interest rate than their other clients.
Required - Assume you are the audit manager preparing your audit plan:
1) Describe the factors would you consider when allocating staff to the audit?
2) Discuss the audit risks that need to be considered:
i) At the planning stage
ii) During the audit
iii) After the sign-off of the audit report
3) Identify the main account or groups of accounts that could be impacted and give reasons.
4) Design effective audit procedures that would be included in the audit plan.
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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