Financial Analysis of Crazy Eddie

weirdie Eddie Financial Analysis 3/3/12 After cipher the common sizing fiscal statements and financial proportions, I build many reasons why underdone Eddie merged should have been considered a high risk audit. The large size of gunstock which was around half of total assets would have do caudex a high risk area of focus. As we know hazardous Eddies executives grossly overstated inventories, and in order to stop questioning they deliberately destroyed enfranchisement 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 whitethorn have been appropriate for the auditors to fall upon an unannounced visit to around of Crazy Eddies warehouses and do inventory counts. Crazy Eddies inventory overturn compared to their gross revenue particularly for the form 1987 is a cause for concern. The ships companys inventory derangement is the relatively low at 3.22%, only they repo rted the highest give the axe 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, thus that account should be extensively evaluated to rule out duplicitous activity. In a company that sells cars I would expect that goods would go on a hefty estimate of days in inventory, except for an electronics store I would lack to know why this was happening. thoroughgoing ass! et 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 try to generate revenues using its assets, which is the reversion of what their financial statements report. Another trim with the provided financials is that overall their profitability barely does not make sense. During the mid(prenominal) to...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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