Regina Audit Case
1. Prepare common-sized financial statements for Regina for the period 1986 to 1988. Also, compute key liquidity, solvency, activity, and profitability ratios for the years 1987 and 1988. Given these data, identify what you believe were the high-risk financial statement line items for the 1988 Regina audit.
I computed the ratios for 1986 as well as the required 1987 and 1988. The most interesting occurrence is how the values for the growth were not translated in the ratios. As sales increased, cost of goods sold decreased. This would indicate that either you raised prices of your product or you found a method to manufacture for less. If the latter were accurate, then I would assume that could be a chance of increased returns. Bank debt rose
I computed the ratios for 1986 as well as the required 1987 and 1988. The most interesting occurrence is how the values for the growth were not translated in the ratios. As sales increased, cost of goods sold decreased. This would indicate that either you raised prices of your product or you found a method to manufacture for less. If the latter were accurate, then I would assume that could be a chance of increased returns. Bank debt rose