Financial Analysis of Crazy Eddie

weirdie Eddie Financial Analysis 3/3/12 After cipher the common size of it financial statements and financial ratios, I build many reasons why unhinged Eddie combine should have been considered a high risk audit. The large size of gunstock which was around half of total assets would have make strain a high risk area of focus. As we know wild Eddies executives grossly overstated inventories, and in order to stop questioning they deliberately destroyed sustenance that would have revealed an inventory shortage. This was a huge red give way and the auditors should have melodic theme so as well. It may have been appropriate for the auditors to fall upon an unannounced visit to any(prenominal) of Crazy Eddies warehouses and do inventory counts. Crazy Eddies inventory overturn compared to their gross revenue particularly for the course of instruction 1987 is a cause for concern. The ships companys inventory derangement is the relatively low at 3.22%, only they reported the highest realise barters of all four years which was $352,523,000. Going along with that statement, Crazy Eddies auditors should have asked questions as to why their merchandise inventory account dropped so importantly over these four years.

Since Crazy Eddie was a retail store, the sale of inventory to customers is the largest part of their revenue, and so that account should be extensively evaluated to rule out fallacious activity. In a company that sells cars I would expect that goods would overhaul a hefty estimate of days in inventory, only if for an electronics store I woul d lack to know why this was happening. t! ot up asset turnover besides plummeted considerably. The asset turnover ratio is the amount of sales generated for either dollar in assets. A low asset turnover ratio suggests that Crazy Eddie was assay to generate revenues using its assets, which is the reversion of what their financial statements report. Another trend with the provided financials is that overall their profitability barely does not make sense. During the middle to...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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