1. Using the information above, complete the calculation of accounting ratios andpercentages and comment briefly on the performance of the company for the twoyears. 2. By reference to requirement 1, identify the areas that are subject to increased auditrisk and describe the further audit work you would perform in response to those risks. Analita specializes in the development of electronic components within quite a competitiveenvironment causing concerns for marketing and pricing. Its non-current assets primarilyinclude IT software, property, and investments, and there have been additions to these duringthe year.As audit manager, you are conducting a preliminary analytical review and associated riskanalysis for this client for the year ended June 30 2019. You have been presented with thefollowing draft financial information about Analita with incomplete ratios and percentagescalculation.RevenueCost of salesGross ProfitDistribution costsAdministrative expensesSelling expensesProfit from operationsNet interest receivableProfit before taxIncome tax expenseNet profitRetained profitsDividends paidINCOME STATEMENTYear ended June 3020192018$'000$'00018,40616,5295,6095,05712,79711,4723,5982,89611641,9984,4424746,1044956,5991,8524,7473,777$970,0003,59312454,8382,2092,6291,327$1,302,000 Accounting ratios and percentagesEarnings per sharePerformance ratios include the following:Gross margin ((Gross profit/revenue)Expenses as a percentage of revenue:Distribution costsAdministrative expensesSelling expensesOperating profit as a percentage of revenue0.54?????1.25?????Part ARequired1. Using the information above, complete the calculation of accounting ratios andpercentages and comment briefly on the performance of the company for the twoyears.2. By reference to requirement 1, identify the areas that are subject to increased auditrisk and describe the further audit work you would perform in response to those risks.Part BBy reference to Part A:1. What is the purpose of using analytical procedures on the client's performancemeasurement system?2. What are some of the key factors that impact group interaction in an auditassignment?

Ratio analysis is a method of financial analysis that uses different ratios to assess and interpret…

1. Using the information above, complete the calculation of accounting ratios and percentages and comment briefly on the performance of the company for the two years. 2. By reference to requirement 1, identify the areas that are subject to increased audit risk and describe the further audit work you would perform in response to those risks.

1. Using the information above, complete the calculation of accounting ratios and percentages and comment briefly on the performance of the company for the two years. 2. By reference to requirement 1, identify the areas that are subject to increased audit risk and describe the further audit work you would perform in response to those risks.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

100%

1. Using the information above, complete the calculation of accounting ratios and
percentages and comment briefly on the performance of the company for the two
years.
2. By reference to requirement 1, identify the areas that are subject to increased audit
risk and describe the further audit work you would perform in response to those risks.

Analita specializes in the development of electronic components within quite a competitive
environment causing concerns for marketing and pricing. Its non-current assets primarily
include IT software, property, and investments, and there have been additions to these during
the year.
As audit manager, you are conducting a preliminary analytical review and associated risk
analysis for this client for the year ended June 30 2019. You have been presented with the
following draft financial information about Analita with incomplete ratios and percentages
calculation.
Revenue
Cost of sales
Gross Profit
Distribution costs
Administrative expenses
Selling expenses
Profit from operations
Net interest receivable
Profit before tax
Income tax expense
Net profit
Retained profits
Dividends paid
INCOME STATEMENT
Year ended June 30
2019
2018
$'000
$'000
18,406
16,529
5,609
5,057
12,797
11,472
3,598
2,896
1164
1,998
4,442
474
6,104
495
6,599
1,852
4,747
3,777
$970,000
3,593
1245
4,838
2,209
2,629
1,327
$1,302,000

Accounting ratios and percentages
Earnings per share
Performance ratios include the following:
Gross margin ((Gross profit/revenue)
Expenses as a percentage of revenue:
Distribution costs
Administrative expenses
Selling expenses
Operating profit as a percentage of revenue
0.54
?
?
?
?
?
1.25
?
?
?
?
?
Part A
Required
1. Using the information above, complete the calculation of accounting ratios and
percentages and comment briefly on the performance of the company for the two
years.
2. By reference to requirement 1, identify the areas that are subject to increased audit
risk and describe the further audit work you would perform in response to those risks.
Part B
By reference to Part A:
1. What is the purpose of using analytical procedures on the client's performance
measurement system?
2. What are some of the key factors that impact group interaction in an audit
assignment?

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