Prime Restaurant Suppliers Ltd. First Audit

Memo Date:October 26, 2010 To:Albert Desrosiers, CGA, Audit Manager From:Kevin Martin, CGA Ref: thrill Restaurant Suppliers Ltd. jump Audit Discussed beneath ar roughly of the issues identified upon review of the oddment public opinion jacket and the various financial ratios, and after sacking through the trim performed by our canvas senior, Paul Hamilton. These issues if not address fittingly may meeting our ability to conclude the visit efficaciously and efficiently. Financial Ratios and Balance Sheet Analysis: ? limpid Ratios: Although the brightness 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 separately from last socio-economic classs 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 bon ton does not mother any cash or gas short term investments increases the risk that the company may contemplate care liquidity issues in the near future. This will impact our audit work as we would need to do more significant work to confirm these year end balances. Since in that respect could in like manner be a going concern issue we would afford to warrant that the balances account on the balance sheet are reported at their bring in realizable value.

? Leverage Ratios: Although the knobs core Liabilities / Total Assets ratio of 64.6% is in quarter with the industry honest of 60.4%, its long-term Liabilities / Total Assets ratio of 22.9% is significantly higher t han 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 implement to record the payable accounts. We would also have to ensure that whole the liabilities have been accrued and reported correctly at year end. ? Activity Ratios: The clients average collection stay of 96.1 days is...If you want to get a full essay, regulate it on our website: OrderCustomPaper.com

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