Pinnacle Manufactuirng Part I
Analytical Procedures Problem 8-40 Devry University ACCT444 January 24, 2013
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: | Pinnacle Manufacturing Company | DATE OF FINANCIAL STATEMENTS: | For Period/Dates Ending December 31, 2009, 2008, 2007 | LIQUIDITY RATIOS 2009 | 2008 | 2007 | | | | | Current Assets | 44,497,169 | 36,195,745 | 36,005,390 | Current Liabilities | 25,926,158 | 17,605,301 | 16,340,517 | 1. Current ratio = | 1.72 | 2.06 | 2.20 | Comments: Current Ratio is greater than one, suggests that Pinnacle can pay of their current | liabilities with their current assets for the next 12 months. |
2009 | 2008 | 2007 | | | | | Current Assets - Inventory | 16,465,846 | 13,989,486 | 14,030,170 | Current Liabilities | 25,926,158 | 17,605,301 | 16,340,517 | 2. Quick or acid test ratio = | 0.635 | 0.795 | 0.859 | Comments: Since the ratios are less than one indicates that Pinnacle would not be able to repay all its | debts by using its most liquid assets. |
PROFITABILITY RATIOS 2009 | 2008 | 2007 | | | | | Net Sales - Cost of Goods Sold | 44,437,210 | 40,983,756 | 37,128,911 | Net Sales | 149,245,176 | 137,579,664 | 125,841,272 | 3. Gross profit ratio = | 0.298 | 0.298 | 0.295 | Comments: The company retains about $0.30 from every $1.00 towards paying off selling, general, and | administration expenses, interest expenses and distributions to shareholders. |
2009 | 2008 | 2007 | | | | | Net Income | 3,260,411 | 2,470,557 | 1,493,609 |
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: | Pinnacle Manufacturing Company | DATE OF FINANCIAL STATEMENTS: | For Period/Dates Ending December 31, 2009, 2008, 2007 | LIQUIDITY RATIOS 2009 | 2008 | 2007 | | | | | Current Assets | 44,497,169 | 36,195,745 | 36,005,390 | Current Liabilities | 25,926,158 | 17,605,301 | 16,340,517 | 1. Current ratio = | 1.72 | 2.06 | 2.20 | Comments: Current Ratio is greater than one, suggests that Pinnacle can pay of their current | liabilities with their current assets for the next 12 months. |
2009 | 2008 | 2007 | | | | | Current Assets - Inventory | 16,465,846 | 13,989,486 | 14,030,170 | Current Liabilities | 25,926,158 | 17,605,301 | 16,340,517 | 2. Quick or acid test ratio = | 0.635 | 0.795 | 0.859 | Comments: Since the ratios are less than one indicates that Pinnacle would not be able to repay all its | debts by using its most liquid assets. |
PROFITABILITY RATIOS 2009 | 2008 | 2007 | | | | | Net Sales - Cost of Goods Sold | 44,437,210 | 40,983,756 | 37,128,911 | Net Sales | 149,245,176 | 137,579,664 | 125,841,272 | 3. Gross profit ratio = | 0.298 | 0.298 | 0.295 | Comments: The company retains about $0.30 from every $1.00 towards paying off selling, general, and | administration expenses, interest expenses and distributions to shareholders. |
2009 | 2008 | 2007 | | | | | Net Income | 3,260,411 | 2,470,557 | 1,493,609 |