Reference no: EM132614143
You have just completed preliminary analytical procedures of your client, Modern Technology Ltd (MTL), which has a 30 June financial year end.
MTL is involved in the development and design of new computer games and is in the final development stages of a new game that it expects to be a huge success. The game has involved substantial research and development over the past year. The CEO, Jackson Clark, is extremely excited about this new product and believes that its sales will reverse any past trading problems the company has had. He has also told you that he has raised sufficient finance to enable finalisation and launch of the new game within four months.
During the initial years when the company experienced rapid growth, all profits were ploughed into research and development, computer equipment and the purchase of an office block as its corporate headquarters. Office space not required by the company is rented out to tenants on normal commercial terms.
The results of the ratio analysis undertaken as part of your preliminary analytical procedures are as follows:
Ratio 2017 2018 2019
Quick Asset ratio 1.13 .86 .75
Days in receivables 21 31 40
Debt to equity ratio 1.7 1.95 2.35
Gross profit ratio .35 .27 .21
Net profit ratio -.05 -.07 -.09
REQUIRED:
Question 1: For each of the above ratios identify the trend and outline. What does this mean for MTL's financial position with reference to the ratio analysis undertaken as part of the analytical procedures?
|
What scholarly evidence did you use in making your decision
: What scholarly evidence did you use in making your decision? Why is this resource credible and compelling? Compare your chosen case to that of Christian.
|
|
Describe effect of each of circumstance on auditor report
: How describe the effect of each of the above circumstances on your auditor's report if management were to refuse to make any changes
|
|
Calculate the carrying value of the bonds
: On October 1, 2012, Wenn Co. purchased 800 of the $1,000 face value, 8% bonds of Loy, Inc., for $936,000, calculate the carrying value of the bonds
|
|
Discuss how society decides what to define as a crime
: As we learn in the video, Crimes of the Powerful, our justice system tends to focus on street crime, often ignoring much more significant problems.
|
|
What does the mean for MTL financial position
: What does this mean for MTL's financial position with reference to the ratio analysis undertaken as part of the analytical procedures?
|
|
Discuss what role the war on drugs might play
: Considering the "war on drugs," discuss what role the "war on drugs" might play in contributing to an overburdened public defense system?
|
|
Prepare the journal entries to reflect the accounting
: Prepare the journal entries to reflect the accounting for the company's pension plan for the year ending December 31, 2020
|
|
What impact on planning of an audit engagement
: Audits are a key control activity for many companies. Explain FOUR factors that creat a demand for an independent financial report.
|
|
What are the individual and social implications of problem
: What are the individual and social implications of this problem? Discussion of implications should be supported by accurate research data.
|