Auditing and Assurance: Measurement and Review of Financial Performance

Auditing and Assurance

TABLE OF CONTENTS
2.7.....................................................................................................................................................3
Preliminary analytical procedure................................................................................................3
2.8.....................................................................................................................................................4
Measurement and review of financial performance....................................................................4
2.9.....................................................................................................................................................5
Objectives, strategies and related business risk..........................................................................5
REFERENCES................................................................................................................................6

2.7
Preliminary analytical procedure
Particular Formula 2019 2020
Net profit ratio NP/ net sales * 100 35% -6%
Net profit 3534 -573
Net sales 10117 10142
Particular Formula 2019 2020
Current ratio CA/ CL 1.55 1.60
Current asset 847669 926418
Current liabilities 548581 579826
Particular Formula 2019 2020
Liquid ratio (CA- inventories)/ CL 1.55 1.60
Current asset 847669 926418
Inventory 0 0
Current liabilities 548581 579826
Particular Formula 2019 2020
Asset turnover ratio Net sales/ average total assets 0.01164 0.01
Net sales 10117 10142
Average total assets 869166 947066
Particular Formula 2019 2020
Return on equity Net income/ shareholder equity 6.81 -1.05
Net income 3534 -573
Shareholder equity 51889 54642
With the above analysis of the various ratio it is clear that company is not performing in
proper and effective manner. The reason pertaining to the fact that company is suffering from the
loss and as a result of this the operation of company is not good. Hence, for this it is very
important for the company to work in such a manner that the loss for the company is being
converted in profits. Further with the analysis of the current ratio it was clear that liquidity of the