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European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 43 (2011) EuroJournals, Inc. 2011 http://www.eurojournals.com/EJEFAS.htm Effect of using Financial Ratios on.

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The audit opinion is a very important part of the audit report because it makes a statement about a company's financial status to investors. The audit report provides a picture of a company's financial performance in a given fiscal year.

One type of ratio analysis involves comparing line items on a financial statement to assess them for concerns such as liquidity, profitability and efficiency. Auditors calculate ratios and map them over an extended period.

Auditors use ratio analysis in their audit to compare ratios for the current year with ratios for a prior year, budget or an industrial average. Any material differences in the ratios must be explained by the auditors.

In the independent auditor's report, an auditor can issue one of five different opinions. There are two types of reservations that can be made: a GAAP departure or a scope limitation. The opinion issued depends on the type of reservation, which depends upon (1) materiality, and (2) pervasiveness.

The financial ratios used by the auditor will fall into 3 general categories: Profitability/Return. Gross Margin. Net Margin. ROCE. Liquidity/Efficiency. Receivables/Payables/Inventory Days. Current Ratio. Quick Ratio. Gearing. Financial Gearing. Operational Gearing.

Ratio analysis is useful because it allows you to see if two figures have moved consistently with one another. You should be concerned if they haven't. There are three main groups of ratios: profitability, liquidity and risk. This is a significant increase (15%) and an impressive performance in recessionary times.

Auditors use ratio analysis in their audit to compare ratios for the current year with ratios for a prior year, budget or an industrial average. Any material differences in the ratios must be explained by the auditors.

The common financial ratios every business should track are 1) liquidity ratios 2) leverage ratios 3)efficiency ratio 4) profitability ratios and 5) market value ratios.

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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232