This document analyzes the financial statements of Pinnacle Manufacturing Company for the years 2011-2013. It identifies material accounts with significant year-over-year changes and calculates common financial ratios. The analysis finds declining liquidity ratios, increasing debt levels, and growing accounts receivable and inventory balances, indicating potential financial issues. While Pinnacle has been profitable, its increasing debt usage is a ongoing concern that warrants further examination.
Vietnam’s consumer finance (CF) market (by commercial banks & FinCos) has dipped to low double-digit growth (10.7%YoY, 2020) after a year of hardship. However, despite the headwinds, Vietnam CF managed to secure over 20% of the country loan book.
The unprecedented COVID-19 outbreak accelerated the following key trends in the CF market:
The pandemic prompted the acceleration of the digital transformation of customer journey amongst FinCos
The launch of mobile money and the booming of digital payment brought both challenges and opportunities for FinCos, especially their credit card business
M&A emerged as the game-changer to foster future growth given the strong growth potential of the CF market and the Government’s policies that support sector consolidation and expansion of FinCos to repel black credit market.
Download FULL report: https://bit.ly/vietnam-consumer-finance-report-2021
After a period of strong loan book growth during 2013-2017, Vietnam has witnessed a slowdown - the national loan book grew by 14% in 2018 compared to 18% in 2017. Concerns about aggressive lending practices, and the possible risk in the real estate and non-production sectors have resulted in a tightening of regulations by the State Bank of Vietnam (SBV). Additionally, the focus was on resolving the legacy bad debt with the resulting non-performing loans ratio (NPL) at only 1.89% by YE2018. Considering these events, the SBV also set a modest target of 14% YoY credit growth for 2019.
The strongest driver for credit growth, the consumer finance market, has been maturing after several years of exponential growth. In 2018, CF increased its contribution to the national loan book, at 19.7%, compared to 16.7% in 2017. At the same time, although the market has been growing at 59% YoY for the last five years, in 2018, the overall growth registered at 30.4%. The slowdown is attributed to the market’s development, growing from a larger base, the increasing exposure to real estate loans, as well as the saturation of some of CF key products such as installment loans for home appliances and consumer electronics.
Download pdf here: https://bit.ly/2RDrUm3
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Chọn lọc 108 đề tài báo cáo thực tập tài chính ngân hàng hay cho sinh viên ngành tài chính ngân hàng làm báo cáo thực tập tốt nghiệp tham khảo, Nhận viết đề tài điểm cao – ZALO 0917193864
Vietnam’s consumer finance (CF) market (by commercial banks & FinCos) has dipped to low double-digit growth (10.7%YoY, 2020) after a year of hardship. However, despite the headwinds, Vietnam CF managed to secure over 20% of the country loan book.
The unprecedented COVID-19 outbreak accelerated the following key trends in the CF market:
The pandemic prompted the acceleration of the digital transformation of customer journey amongst FinCos
The launch of mobile money and the booming of digital payment brought both challenges and opportunities for FinCos, especially their credit card business
M&A emerged as the game-changer to foster future growth given the strong growth potential of the CF market and the Government’s policies that support sector consolidation and expansion of FinCos to repel black credit market.
Download FULL report: https://bit.ly/vietnam-consumer-finance-report-2021
After a period of strong loan book growth during 2013-2017, Vietnam has witnessed a slowdown - the national loan book grew by 14% in 2018 compared to 18% in 2017. Concerns about aggressive lending practices, and the possible risk in the real estate and non-production sectors have resulted in a tightening of regulations by the State Bank of Vietnam (SBV). Additionally, the focus was on resolving the legacy bad debt with the resulting non-performing loans ratio (NPL) at only 1.89% by YE2018. Considering these events, the SBV also set a modest target of 14% YoY credit growth for 2019.
The strongest driver for credit growth, the consumer finance market, has been maturing after several years of exponential growth. In 2018, CF increased its contribution to the national loan book, at 19.7%, compared to 16.7% in 2017. At the same time, although the market has been growing at 59% YoY for the last five years, in 2018, the overall growth registered at 30.4%. The slowdown is attributed to the market’s development, growing from a larger base, the increasing exposure to real estate loans, as well as the saturation of some of CF key products such as installment loans for home appliances and consumer electronics.
Download pdf here: https://bit.ly/2RDrUm3
Giá 10k/5 lượt download Liên hệ page để mua: https://www.facebook.com/garmentspace
Xin chào, Nếu bạn cần mua tài liệu xin vui lòng liên hệ facebook: https://www.facebook.com/garmentspace Tại sao tài liệu lại có phí ??? Tài liệu một phần do mình bỏ thời gian sưu tầm trên Internet, một số do mình bỏ tiền mua từ các website bán tài liệu, với chi phí chỉ 10k cho 5 lượt download tài liệu bất kỳ bạn sẽ không tìm ra nơi nào cung cấp tài liệu với mức phí như thế, xin hãy ủng hộ Garment Space nhé, đừng ném đá. Xin cảm ơn rất nhiều
Chọn lọc 108 đề tài báo cáo thực tập tài chính ngân hàng hay cho sinh viên ngành tài chính ngân hàng làm báo cáo thực tập tốt nghiệp tham khảo, Nhận viết đề tài điểm cao – ZALO 0917193864
Luận văn: Phân tích và đánh giá tình hình tài chính tại công ty TNHH thương m...Nguyễn Công Huy
email: luanvan84@gmail.com website: http://luanvan.forumvi.com
Luận văn: Phân tích và đánh giá tình hình tài chính tại công ty TNHH thương mại Vạn Phúc
Để xem full tài liệu Xin vui long liên hệ page để được hỗ trợ
:
https://www.facebook.com/garmentspace/
https://www.facebook.com/thuvienluanvan01
HOẶC
https://www.facebook.com/thuvienluanvan01
https://www.facebook.com/thuvienluanvan01
tai lieu tong hop, thu vien luan van, luan van tong hop, do an chuyen nganh
Vietnam has two airline companies – Vietnam Airlines and VietJet. How are those company perceived by Vietnamese? Q&Me conducted the survey to those who have taken the flight in last 12 months.
Hệ thống ngân hàng thương mại việt nam và những vấn đề đặt ra,Những hạn chế của ngân hàng thương mại Việt Nam,Yếu điểm của ngân hàng thương mại Việt Nam,
Nhận viết luận văn Đại học , thạc sĩ - Zalo: 0917.193.864
Tham khảo bảng giá dịch vụ viết bài tại: vietbaocaothuctap.net
Download luận văn đồ án tốt nghiệp ngành tài chính ngân hàng với đề tài: Một số giải pháp nhằm nâng cao chất lượng tín dụng tại Ngân hàng Thương mại Cổ phần Công Thương Việt Nam chi nhánh Tô Hiệu
Solution manual for Financial Accounting 4th Edition by Kemp and Waybrightremorter
link full download: https://www.testbankfire.com/download/solution-manual-for-financial-accounting-4th-edition-by-kemp-and-waybright/
Language: English
ISBN-10: 0134125053
ISBN-13: 978-0134125053
ISBN-13: 9780134125053
Giải pháp nâng cao chất lượng tín dụng ngân hàng tmcp quốc dân – chi nhánh hả...Thư viện Tài liệu mẫu
Tải file tài liệu tại Website: inantailieu.com hoặc sdt/ ZALO 09345 497 28
Khóa luận Giải pháp nâng cao chất lượng tín dụng ngân hàng tmcp quốc dân – chi nhánh hải an – hải phòng
Tài chính là một nguồn lực quan trọng đối với sự tồn tại và phát triển của doanh nghiệp, đòi hỏi nhà quản trị phải có những kiến thức chuyên môn và kỹ năng nghiệp vụ chuyên nghiệp để không chỉ quản trị được tài chính hiệu quả mà còn không ngừng gia tăng nguồn lực tài chính cho doanh nghiệp.
This is the third half-year version in addition to the full-year review report series for Vietnam Consumer Finance Market. Our report provides updated information with emphasis on in-depth analysis of market share and financial performance amongst key players, the development of each product segment, prominent product trends as well as new market entrants’ movements.
FULL Report: https://fiinresearch.vn/Store/ReportDetails?id=149705
Luận văn: Phân tích và đánh giá tình hình tài chính tại công ty TNHH thương m...Nguyễn Công Huy
email: luanvan84@gmail.com website: http://luanvan.forumvi.com
Luận văn: Phân tích và đánh giá tình hình tài chính tại công ty TNHH thương mại Vạn Phúc
Để xem full tài liệu Xin vui long liên hệ page để được hỗ trợ
:
https://www.facebook.com/garmentspace/
https://www.facebook.com/thuvienluanvan01
HOẶC
https://www.facebook.com/thuvienluanvan01
https://www.facebook.com/thuvienluanvan01
tai lieu tong hop, thu vien luan van, luan van tong hop, do an chuyen nganh
Vietnam has two airline companies – Vietnam Airlines and VietJet. How are those company perceived by Vietnamese? Q&Me conducted the survey to those who have taken the flight in last 12 months.
Hệ thống ngân hàng thương mại việt nam và những vấn đề đặt ra,Những hạn chế của ngân hàng thương mại Việt Nam,Yếu điểm của ngân hàng thương mại Việt Nam,
Nhận viết luận văn Đại học , thạc sĩ - Zalo: 0917.193.864
Tham khảo bảng giá dịch vụ viết bài tại: vietbaocaothuctap.net
Download luận văn đồ án tốt nghiệp ngành tài chính ngân hàng với đề tài: Một số giải pháp nhằm nâng cao chất lượng tín dụng tại Ngân hàng Thương mại Cổ phần Công Thương Việt Nam chi nhánh Tô Hiệu
Solution manual for Financial Accounting 4th Edition by Kemp and Waybrightremorter
link full download: https://www.testbankfire.com/download/solution-manual-for-financial-accounting-4th-edition-by-kemp-and-waybright/
Language: English
ISBN-10: 0134125053
ISBN-13: 978-0134125053
ISBN-13: 9780134125053
Giải pháp nâng cao chất lượng tín dụng ngân hàng tmcp quốc dân – chi nhánh hả...Thư viện Tài liệu mẫu
Tải file tài liệu tại Website: inantailieu.com hoặc sdt/ ZALO 09345 497 28
Khóa luận Giải pháp nâng cao chất lượng tín dụng ngân hàng tmcp quốc dân – chi nhánh hải an – hải phòng
Tài chính là một nguồn lực quan trọng đối với sự tồn tại và phát triển của doanh nghiệp, đòi hỏi nhà quản trị phải có những kiến thức chuyên môn và kỹ năng nghiệp vụ chuyên nghiệp để không chỉ quản trị được tài chính hiệu quả mà còn không ngừng gia tăng nguồn lực tài chính cho doanh nghiệp.
This is the third half-year version in addition to the full-year review report series for Vietnam Consumer Finance Market. Our report provides updated information with emphasis on in-depth analysis of market share and financial performance amongst key players, the development of each product segment, prominent product trends as well as new market entrants’ movements.
FULL Report: https://fiinresearch.vn/Store/ReportDetails?id=149705
15.
Ratio Analysis: Decision Focus
LO1, 2, 4, 5, 6
Avantronics is a manufacturer of electronic components and accessories that has total assets of $20,000,000. Selected financial ratios for Avantronics and the industry averages for firms of similar size are as follows:
Avantronics
Industry Average
Year 1
Year 2
Year 3
Current ratio
2.09
2.27
2.51
2.24
Quick ratio
1.15
1.12
1.19
1.22
Inventory turnover
2.40
2.18
2.02
3.50
Profit margin
0.14
0.15
0.17
0.11
Debt-to-equity ratio
0.24
0.37
0.44
0.35
Avantronics is being reviewed by several entities whose interests vary, and the company’s financial ratios are a part of the data being considered. Each of the following parties must recommend an action based on its evaluation of Avantronics’s financial position:
MidCoastal Bank.
The bank is processing Avantronics’s application for a new five-year term note. MidCoastal has been the banker for Avantronics for several years but must reevaluate the company’s financial position for each major transaction.
Ozawa Company.
Ozawa is a new supplier to Avantronics and must decide on the appropriate credit terms to extend to the company.
Drucker & Denon.
A brokerage firm specializing in the stock of electronics firms that are sold over the counter, Drucker & Denon must decide whether it will include Avantronics in a new fund being established for sale to Drucker & Denon’s clients.
Working Capital Management Committee.
This is a committee of Avantronics’s management personnel chaired by the chief operating officer. The committee is responsible for periodically reviewing the company’s working-capital position, comparing actual data against budgets, and recommending changes in strategy as needed.
Required
·
A. Describe the analytical use of each of the five ratios presented in the chart.
·
B. For each of the four entities described, identify the financial ratios, from those ratios presented, that would be most valuable as a basis for its decision regarding Avantronics.
·
C. Discuss what the financial ratios presented in the question reveal about Avantronics. Support your answer by citing specific ratio levels and trends, as well as the interrelationships among these ratios.
·
16.
·
Horizontal Analysis
LO2
·
Following are the income statements for Martha’s Miscellaneous for Year 1 and Year 2:
Martha’s Miscellaneous Comparative Statements of Income and Retained Earnings
$
%
Year 2
Year 1
Change
Change
Sales revenue
$700,000
$650,000
Cost of goods sold
500,000
455,000
Gross profit
$200,000
$195,000
Payroll expense
$ 50,000
$ 42,250
Insurance expense
30,000
29,000
Rent expense
18,000
18,000
Depreciation
35,000
15,000
Total expenses
$133,000
$104,250
Operating income
$ 67,000
$ 90,750
Interest expense
(7,000)
(5,000)
Gain on vehicle sale
25,000
—
Loss on sale of securities
(25,000)
—
Interest revenue
75,000
50,000
Net income before interest and taxes
$135,000
$13.
Your answer is incorrect. Try again.Prepare a comparati.docxdanielfoster65629
Your answer is incorrect. Try again.
Prepare a comparative balance sheet of Gilmour Company showing the dollar change and the percent change for each item. (Round percentages to 2 decimal places, e.g. 2.25%. If $ or % change are in decrease, enter amounts or percentages using either a negative sign preceding the number e.g. -45, -2.25% or parentheses e.g. (45), (2.25)%.)
GILMOUR COMPANY
Comparative Balance Sheet
December 31, 2013 and 2012
December 31
Increase or (Decrease)
Assets
2013
2012
$ Change
% Change
Cash
$ 180,000
$ 275,000
$
%
$-95,000
-34.55%
Accounts receivable (net)
219,500
155,300
64,200
41.34%
Short-term investments
269,300
149,600
119,700
80.01%
Inventories
1,059,600
979,300
80,300
8.20%
Prepaid expenses
24,750
24,750
0
0.00%
Fixed assets
2,585,200
1,949,400
635,800
32.62%
Accumulated depreciation
( 1,000,500
)
( 750,100
)
-250,400
33.38%
Total
$ 3,337,850
$ 2,783,250
$
%
554,600
19.93%
Liabilities and Stockholders’ Equity
Accounts payable
$ 50,020
$ 74,100
$
%
-24,080
-32.50%
Accrued expenses
170,400
199,400
-29,000
-14.54%
Bonds payable
450,500
189,600
260,900
137.61%
Capital stock
2,100,000
1,769,300
330,700
18.69%
Retained earnings
566,930
550,850
16,080
2.92%
Total
$ 3,337,850
$ 2,783,250
$
%
554,600
19.93%
Your answer is partially correct. Try again.
Answer each of the questions in the following unrelated situations.
(a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $492,400, what is the amount of current liabilities?
Current Liabilities
$
(b) A company had an average inventory last year of $209,000 and its inventory turnover was 5. If sales volume and unit cost remain the same this year as last and inventory turnover is 9 this year, what will average inventory have to be during the current year? (Round answer to 0 decimal places, e.g. 125.)
Average Inventory
$
(c) A company has current assets of $88,790 (of which $37,160 is inventory and prepaid items) and current liabilities of $37,160. What is the current ratio? What is the acid-test ratio? If the company borrows $13,870 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (Round answers to 2 decimal places, e.g. 2.50.)
Current Ratio
:1
Acid Test Ratio
:1
New Current Ratio
:1
New Acid Test Ratio
:1
(d) A company has current assets of $605,100 and current liabilities of $239,000. The board of directors declares a cash dividend of $191,200. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend? (Round answers to 2 decimal places, e.g. 2.50.)
Current ratio after the declaration but before payment
:1
Current ratio after the p.
1. CALIFORNIA STATE UNIVERSITY FULLERTON
AUDITING 402
SPRING 2016
Project Paper
Prepared By:
Alexander Estelle
Frank Rodriguez
Vivian Le
Celia Halverson
Yoon Hwan Cho
Yasamin Farahanyrad
2. Pinnacle Part 1: 8-39
a. See Exhibit 8-39A at end of paper for year-to-year changes.
Accounts
% Change 2012-
2013
% Change 2011-
2012
Receivable 51.30% 8.61%
Inventory 26.23% 1.05%
Account Payable 37.09% 24.71%
Short term- Long term Debt 49.30% 6.47%
Long Term Debt 9.30% -0.17%
o We have chosen the following five accounts based on our materiality level,
which we set at 8%. Receivables, inventory, account payable, short-term debt
and long-term debt are all above our materiality level and represent a
significant amount on the financial statements of Pinnacle Manufacturing.
b. Common Ratios:
Common Ratios
Ratio
2013 2012 2011
Cash Ratio 0.25 0.34 0.43
Current Ratio 1.75 1.93 2.19
Quick Ratio 0.69 0.75 0.85
Net Profit Margin 0.80 0.70 1.19
Debt-Equity 0.90 0.74 0.71
Inventory Turnover 3.78 4.18 -
Days in Inventory 96.48 87.27 -
AR Turnover 12.78 16.09 -
Days in AR 28.57 22.68 -
• We chose three ratios to determine short-term debt paying ability, which are
the cash ratio, current ratio and quick ratio. All three ratios are relatively low
and are declining. This indicates Pinnacle’s position to pay its current
liabilities is becoming worse.
• For the long-term debt obligation, the debt-equity ratio shows the extent that
the financing of the company acquired through the use of debt. The debt-
equity ratio is low, but has been increasing, which indicates the company is
taking on more debt.
• We chose the inventory turnover and receivables turnover to analyze the
liquidity of Pinnacle. These two ratios are also declining, indicating that their
ability to payoff debts is decreasing. Additionally, the amount of days
Pinnacle holds inventory in their warehouse is increasing, and the days to
collect receivables from customers are also increasing.
4. e.
Account Estimate of $ Amount of Potential Misstatement
(Growth Rate 2012-2013 - 8% Materiality) * 2012
Amount = Estimated Potential Misstatement
Machine Tech
Depreciation Expense (21.89% - 8%) * 197,527 = $27,437.84
Wages-Mechanics (16.88% - 8%) * 1,339,627 = $118,917.84
Wages Rental (17.40% - 8%) * 595,389 = $55,963.88
Solar-Electro
Bad Debt (23.61% - 8%) * 157,730 = $24,618.60
Depreciation Expense (29.91% - 8%) * 684,667 = $150,042.64
Legal Service (485.32% - 8%) * 45,950 = $219,328.00
Miscellaneous (446.49% - 8%) * 42,982 = $188,471.44
Salaries-Sales (8.74% - 8%) * 2,402,414 = $17,738.88
Welburn
Property taxes (87.60% - 8%) * 144,181 = $114,773.52
Bad debts (17.28% - 8%) * 831,572 = $77,161.24
Depreciation expense (11.88% - 8%) * 3,759,789 = $145,960.88
Payroll Benefits (14.29% - 8%) * 2,379,426 = $149,682.92
Note: We have selected various accounts above for each division, which represent
substantial changes from 2012 to 2013. These amounts changed above our materiality
level of 8%, as well as, are substantial in amount relative to that division. In this
calculation, we determined the percentage change from 2012 to 2013 and subtracted
our acceptable misstatement amount of 8%, and then multiplied by the 2012 amount
to obtain the estimated potential misstatement.
f. We believe that the information in (e) and (f) both provide the most useful data
because of the high impact that each of those account balances have in the overall
income statement of each division. Additionally these accounts are also above our
materiality level of 8%. We also noticed that as sales had increased salaries and
wages, medical benefits, and property taxes had significantly decreased in
proportion, as well as, in value, which is an area that requires further examination.
6. Exhibit 8-39A
Account % Change 2012-2013 % Change 2011-2012
Income Statement:
Net sales 1.45% 2.70%
Cost of goods sold 2.85% 4.18%
Gross profit -2.07% -0.86%
Operating expenses -2.51% 2.40%
Income from operations 1.87% -23.10%
Other revenues and gains 0% 0%
Other expenses and losses -5.10% -4.12%
Income before income tax 10.32% -37.98%
Income tax 2.85% -35.97%
Net income for the year 16.50% -39.54%
Earnings per share 16.50% -39.54%
Balance Sheet:
Assets
Current assets:
Cash and cash equivalents 5.41% -9.19%
Net receivables 51.30% 8.61%
Inventory 26.23% 1.05%
Other current assets 20.30% 8.70%
Total current assets 27.74% 0.53%
Property, plant and equipment 1.02% 5.78%
Total assets 11.79% 3.60%
Liabilities
Current liabilities
Accounts payable 37.09% 24.71%
Short/current long-term debt 49.30% 6.47%
Other current liabilities 16.99% 5.04%
Total current liabilities 41.28% 13.65%
Long-term debt 9.30% -0.17%
Total liabilities 24.99% 6.16%
Stockholders’ equity
Common stock 0.00% 0.00%
Additional paid-in capital 0.00% 0.00%
Retained earnings 2.83% 2.49%
Total stockholders’ equity 2.04% 1.78%
Total liabilities & stockholders’ equity 11.79% 3.60%
7. Pinnacle Manufacturing Company
Balance Sheet - All Divisions
As of December 31
Common Size Income Statement
2013 2012 2011
Dollar Value % of Sales Dollar Value % of Sales Dollar Value % of Sales
Sales 150,918,731 100.12% 148,764,555 100.12% 144,860,245 100.12%
Sales Returns and Allowances181,103 0.12% 178,518 0.12% 173,832 0.12%
Net Sales 150,737,628 100.00% 148,586,037 100.00% 144,686,413 100.00%
Cost of Sales* 109,284,780 72.50% 106,255,499 71.51% 101,988,165 70.49%
Gross Profit 41,452,848 27.50% 42,330,538 28.49% 42,698,248 29.51%
OPERATING EXPENSES-Allocated
Salaries-Management 2,281,266 1.51% 2,387,993 1.61% 2,295,081 1.59%
Salaries-Office 315,169 0.21% 296,681 0.20% 306,856 0.21%
Licensing and certification fees190,650 0.13% 172,883 0.12% 162,279 0.11%
Security 550,603 0.37% 637,580 0.43% 630,353 0.44%
Insurance 93,197 0.06% 103,842 0.07% 108,491 0.07%
Medical benefits 23,721 0.02% 29,453 0.02% 28,810 0.02%
Advertising 162,512 0.11% 178,009 0.12% 165,678 0.11%
Business publications 6,989 0.00% 5,555 0.00% 774 0.00%
Property taxes 22,585 0.01% 178,009 0.12% 175,692 0.12%
Bad debts 841,699 0.56% 1,034,060 0.70% 992,094 0.69%
Depreciation expense 5,336,783 3.54% 4,641,982 3.12% 4,367,565 3.02%
Accounting fees 273,956 0.18% 297,777 0.20% 299,789 0.21%
Total operating expenses-Allocated10,099,130 6.70% 9,963,824 6.71% 9,533,462 6.59%
OPERATING EXPENSES-Direct
Salaries-Sales 14,970,669 9.93% 15,327,777 10.32% 14,904,392 10.30%
Wages Rental 491,794 0.33% 595,389 0.40% 575,725 0.40%
Wages-Mechanics 1,113,539 0.74% 1,339,626 0.90% 1,333,411 0.92%
Wages-Warehouse 4,891,065 3.24% 5,340,271 3.59% 5,473,249 3.78%
Garbage collection 27,649 0.02% 29,771 0.02% 37,969 0.03%
Payroll benefits 2,657,889 1.76% 2,937,730 1.98% 2,894,300 2.00%
Rent- Warehouse 802,855 0.53% 764,346 0.51% 758,345 0.52%
Telephone 32,402 0.02% 45,173 0.03% 57,867 0.04%
Utilities 262,393 0.17% 267,005 0.18% 274,365 0.19%
Postage 89,763 0.06% 133,518 0.09% 151,278 0.10%
Linen service 17,282 0.01% 12,350 0.01% 16,083 0.01%
Repairs and maintenance 166,985 0.11% 168,405 0.11% 178,213 0.12%
Cleaning service 89,800 0.06% 81,589 0.05% 78,088 0.05%
Legal service 396,016 0.26% 190,540 0.13% 152,238 0.11%
Fuel 286,547 0.19% 341,192 0.23% 279,512 0.19%
Travel and entertainment 103,389 0.07% 103,842 0.07% 100,479 0.07%
Pension expense 228,555 0.15% 237,350 0.16% 127,011 0.09%
Office supplies 149,828 0.10% 148,340 0.10% 171,109 0.12%
Miscellaneous 300,188 0.20% 105,931 0.07% 144,012 0.10%
Total operating expenses-Direct27,078,608 17.96% 28,170,145 18.96% 27,707,646 19.15%
Total Operating Expenses37,177,738 24.66% 38,133,969 25.66% 37,241,108 25.74%
Operating Income 4,275,110 2.84% 4,196,569 2.82% 5,457,140 3.77%
Other Expense-Interest 2,181,948 1.45% 2,299,217 1.55% 2,397,953 1.66%
Income Before Taxes 2,093,162 1.39% 1,897,352 1.28% 3,059,187 2.11%
Federal Income Taxes 883,437 0.59% 858,941 0.58% 1,341,536 0.93%
Net Income 1,209,725 0.80% 1,038,411 0.70% 1,717,651 1.19%
11. Pinnacle Part 2: 9-38
a. Not all situations in Part II related to Acceptable Audit Risk. The situations we
believe do apply to Acceptable Audit Risk listed below according to the three
categories of risk we deem best fit.
External users’ reliance on financial statements
• Situation two involves potentially obsolete inventory. If this inventory is in fact
obsolete, and the amount is significant, the impact on financial statement users
could be affected greatly. This includes investors and creditors, due to assets
being marked down.
• Situation three poses a potential risk affecting the external users reliance on
the financial statements. If Solar-Electro has equipment that is the property of
Welburn, then Pinnacle may be double counting equipment by not properly
consolidating their financial statements. This will lead to an overstatement of
assets. We need to confirm that as the equipment transfers from divisions that it
is properly removed from Welburn’s balance sheet, and placed onto Solar-
Electro’s balance sheet.
• Scenario ten could affect the external users reliance of financial statements,
regarding the outcome of the inquiry. If the ongoing dispute with the IRS results
in significant penalties, then the statements could be significantly altered.
• Additionally, situation eleven, involving intercompany loans, could lead to
misstatements if not properly consolidated.
Likelihood of financial difficulties
• Situation five stands out as a potential risk affecting the likelihood of financial
difficulties. If 15% of Pinnacle’s receivables is likely to not be collected, they
could be facing liquidity problems. The client, Auto-Electro, has not paid their
liability for several months, so the auditor must assess the likelihood and
significance of Pinnacles steadily declining liquidity position.
• Situation six draws concern due to the fact Pinnacle wants to increase its debt
to finance construction. Pinnacle’s liquidity position has been steadily declining
for the past three years, and putting on more debt for this property addition
could significantly affect the liquidity ratios. A higher debt to equity ratio may
turn away investors and creditors.
• Situation nine involves loan agreements between Pinnacle and creditors. The
agreement states that that Pinnacle is required to keep the current ratio above
2.0 and the debt to equity ratio below 1.0. Pinnacle is in violation of this
agreement, and it calls for high concern on future financial difficulties. In 2013
and 2012, Pinnacles current ratio was 1.75 and 1.93 respectively. This indicates
the current ratio is actually falling further away from the required 2.0. This
means that the company's liquidity position is worsening and that it is becoming
more difficult to pay the long term obligations as they come due. Pinnacle has
maintained a debt to equity ratio below 1.0, however, this ratio has been
increasing over the last few years. In 2012 this ratio was a 0.74, and in 2013 it
was at 0.90.