Internal control is a procedure designed by a company, to ensure whether the company’s financial or operational process is done according to the company’s regulations/policies and helps to make operations more efficient and effective. And a good performance of internal control is beneficial to make the company’s financial report more reliable. The audit procedure is a part of internal control that helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. To describe: the list of three major steps in setting control risk in the inventory management process.

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Chapter 13, Problem 13.7RQ

To determine

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Internal control is a procedure designed by a company, to ensure whether the company’s financial or operational process is done according to the company’s regulations/policies and helps to make operations more efficient and effective. And a good performance of internal control is beneficial to make the company’s financial report more reliable. The audit procedure is a part of internal control that helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements.

To describe: the list of three major steps in setting control risk in the inventory management process.

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EPS and optimal debt ratio Williams Glassware has estimated, at various debt ratios, the expected earnings per share and the standard deviation of the earnings per share as shown in the following table. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Earnings per share (EPS) Standard deviation of EPS Debt ratio 0% 20 40 60 80 $2.31 3.02 3.49 3.96 3.85 $1.15 1.82 2.84 3.98 5.59 a. Estimate the optimal debt ratio on the basis of the relationship between earnings per share and the debt ratio. You will probably find it helpful to graph the relationship. b. Graph the relationship between the coefficient of variation and the debt ratio. Label the areas associated with business risk and financial risk.