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concern for EarthWear as EarthWear has relatively low debt compared to the This ratio indicates that EarthWear takes longer to sell its inventory than other companies in the industry. This could be due to numerous factors and does increase the risk of obsolescence of inventory or overstatement of EarthWear's Gross Profit Percentage is 43.90% and the industry average is 38.80%Relative to the industry, EarthWear’s cost of goods sold relative to sale prices is lower than competitors. This advantage produces greater profits but leads to the question of whether the company can sustain lower supplier prices EarthWear has less debt compared to equity than the industry average. This results in lower interest expense as well as less risky returns for shareholders due to relatively low financial leverage. However, it also reduces
AUDIT SCOPE CONSIDERATIONSMateriality for the 2016 audit is calculated on work paper 3-7.COMMUNICATION AND COORDINATIONSUMMARY OF AUDIT PLANAUDIT PLANNING MEMORANDUM APPROVALS