‘Other information’ refers to information other than the financial statements which is presented in the annual reports of the company. Such ‘other information’ contains all the details presented in the annual report ranging from director’s report to future outlook or assessment of company made in the annual report of the company. The auditor has no obligation regarding ‘other information’, however, is bound by professional auditing standards and best practices to go through such information and ensure that no inconsistency is observed in such information with the presented financial statements. To select: The correct option.

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Chapter 18, Problem 18.19MCQ

To determine

Introduction:

‘Other information’ refers to information other than the financial statements which is presented in the annual reports of the company.

Such ‘other information’ contains all the details presented in the annual report ranging from director’s report to future outlook or assessment of company made in the annual report of the company.

The auditor has no obligation regarding ‘other information’, however, is bound by professional auditing standards and best practices to go through such information and ensure that no inconsistency is observed in such information with the presented financial statements.

To select: The correct option.

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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.