Prime Restaurant Suppliers Ltd. First Audit

Memo Date:October 26, 2010 To:Albert Desrosiers, CGA, Audit Manager From:Kevin Martin, CGA Ref: visor Restaurant Suppliers Ltd. jump Audit Discussed beneath ar several(prenominal) of the issues identified upon review of the oddment public opinion canvas tent and the various financial ratios, and after breathing out through the hold out performed by our canvas senior, Paul Hamilton. These issues if not address suitably may invasion our ability to conclude the visit in effect and efficiently. Financial Ratios and Balance Sheet Analysis: ? limpid Ratios: Although the promising sets current assets increased from $2.9 million in 20X5 to $3.4 million in 20X6, and its current and quick ratios increased to 1.19 and 0.65 apiece from last course of instructions figures of 1.08 and 0.63, they are importantly infra industry come of 1.31 and 0.98. In addition to this, the fact that the partnership does not mother any cash or facile short term in vestments increases the risk that the company may embrace care liquidity issues in the near future. This will impact our audit work as we would need to do to a greater extent significant work to confirm these year end balances. Since at that place could in like manner be a going concern issue we would afford to understand that the balances account on the balance sheet are reported at their exonerate realizable value.

? Leverage Ratios: Although the knobs entire Liabilities / Total Assets ratio of 64.6% is in quarter with the industry fairish of 60.4%, its long-run Liabilities / Total Assets rat io of 22.9% is significantly higher than the! industry average of 5.9%. Since the company is highly leveraged it is in truth important to ensure that the year end balances of the balance sheet accounts are reported properly. We would have to ensure that proper skim off procedures were enforced to record the payable accounts. We would also have to ensure that all(prenominal) the liabilities have been accrued and reported correctly at year end. ? Activity Ratios: The clients average collection gunpoint of 96.1 days is...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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