The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008: Current ratio Quick asset ratio Inventory turnover Net profit ratio Gross margin 1.87 1.06 4.86 0.03 0.61 Industry average 1.92 1.11 4.76 0.03 0.61 ratios for Solar Ltd and outline Actual Budgeted results results 1.97 1.92 1.06 1.06 4.21 4.91 0.05 0.03 0.65 0.59 Previous year Required: Provide four (4) possible explanations for the results their implications for the audit.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The following financial ratios have been calculated for Nova Ltd for the year ended 30 June 2008:
1.87 1.06 4.86 0.03 0.61
Industry average
1.92 1.11 4.76 0.03 0.61
ratios for Solar Ltd and outline
Actual Budgeted results results 1.97 1.92
1.06 1.06 4.21 4.91 0.05 0.03 0.65 0.59
Previous year
Required:
Provide four (4) possible explanations for the results their implications for the audit.
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