Prime Restaurant Suppliers Ltd. First Audit

Memo Date:October 26, 2010 To:Albert Desrosiers, CGA, Audit Manager From:Kevin Martin, CGA Ref: choice Restaurant Suppliers Ltd. jump Audit Discussed beneath ar around of the issues identified upon review of the oddment public opinion survey and the various financial ratios, and after dismissal through the browse performed by our canvas senior, Paul Hamilton. These issues if not address appropriately may sham our ability to conclude the visit in effect and efficiently. Financial Ratios and Balance Sheet Analysis: ? limpid Ratios: Although the dexterous sets current assets increased from $2.9 million in 20X5 to $3.4 million in 20X6, and its current and quick ratios increased to 1.19 and 0.65 each from last classs figures of 1.08 and 0.63, they are importantly beneath industry come of 1.31 and 0.98. In addition to this, the fact that the friendship does not mother any cash or bland short term investments increases the risk that the c ompany may reconcile care liquidity issues in the near future. This will impact our audit work as we would need to do more significant work to confirm these year end balances. Since thither could in like manner be a going concern issue we would afford to image that the balances describe on the balance sheet are reported at their top realizable value.

? Leverage Ratios: Although the knobs list Liabilities / Total Assets ratio of 64.6% is in quarter with the industry average out of 60.4%, its long-run Liabilities / Total Assets ratio of 22.9% is significantly higher than the industry average of 5 .9%. Since the company is highly leveraged i! t is in truth important to ensure that the year end balances of the balance sheet accounts are reported properly. We would have to ensure that proper skim off procedures were obligate to record the payable accounts. We would also have to ensure that tout ensemble the liabilities have been accrued and reported correctly at year end. ? Activity Ratios: The clients average collection period of 96.1 days is...If you want to get a full essay, range it on our website: OrderCustomPaper.com

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