Date: 09/10/2014
To: Darlene Wardlaw
From:
Subject: Analytical Procedures
I have completed the preliminary analytical procedures on the financial statements. I have also compared some of the relevant ratios to Apollo Shoes’ competitors Nike and Reebok. Below are my opinions regarding the financial statements:
The large variations in Net Income of Apollo Shoes should be a concern for the entity and it should further looked into to get a better understanding.
The rate at which the entity collects from its credit sales has been fluctuating and has recently decreased.
The rate at which inventory is turned over has substantially decreased.
Apollo Shoes’ debt to equity ratio is significantly high compared to that of their competitor Nike and also higher than Reebok.
These are currently my observation and I will promptly inform you if there are more concerns.