Analytical Procedures—Ratio Analysis Form

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ANALYTICAL PROCEDURES—RATIO ANALYSIS FORM

The auditor can use this form to document the performance and evaluation of ratio analysis in connection with analytical procedures performed in an audit. The form is only a guide and is not a substitute for professional judgment. The form may be modified by adding or omitting certain ratio analysis.

CLIENT NAME:

DATE OF FINANCIAL STATEMENTS:

LIQUIDITY RATIOS

20__ 20__ 19__ 19__
1. Current ratio = Current Assets
Current Liabilities _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
2. Quick or acid test ratio = Current Assets - Inventory
Current Liabilities _____ _____ _____ _____

Comments:

PROFITABILITY RATIOS

20__ 20__ 19__ 19__
1. Gross profit ratio = Net Sales - Cost of Goods Sold
Net Sales _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
2. Operating margin ratio = Income before Income Taxes and Interest
Net Sales _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
3. Net income ratio (or profit margin ratio) = Net Income
Net Sales _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
4. Return on total assets ratio = Net Income + Interest Expense
Total Assets _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
5. Return on equity ratio = Net Income
Average Stockholders’ Equity _____ _____ _____ _____

Comments:

LEVERAGE RATIOS

20__ 20__ 19__ 19__
1. Debt to assets ratio = Total Debt
Total Assets _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
2. Debt to equity ratio = Long-Term Debt
Stockholder’s Equity _____ _____ _____ _____

Comments:

20__ 20__ 19__ 19__
3. Times interest earned ratio = Income before Income Taxes and Interest
Interest Expense _____ _____ _____ _____

Comments: