Audit Planning using Analytical Prodedures
Using the current financial statements of Walt Disney, WalMart and Caterpiller (see files on Canvas) perform the following analytical procedures to plan your audit of these companies.
Horizontal & Vertical Analysis
Prepare a horizontal & vertical analysis on the balance sheets and income statements for the companies for the last 2 years. Identify trends and other things of interest.
Ratio Analysis
Calculate and discuss the following financial statement ratios for the last 2 years
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Current Ratio
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Quick Ratio
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A/R Turnover
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Days Sales in Receivables
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Invtl Turnover
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Days Cost of Sales in Inventory
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Debt/Equity
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Times Interest Earned
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Asset Turnover
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Net Income/Sales
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Based on the outcomes of these procedures identify the critical audit areas and challenges that you expect to face on these audits.