Pinnacle Case Study Part 2

Pinnacle Case Study Part 2 A) out-of-door users corporate trust on financial statements. 1.Pinnacle Manufacturing Company is in private thrust but the amount of debt makes the financial statements in justness useful. They also blueprint on selling their Machine-tech division, the financial statements will be very important to buyers. 2. contingent 4 the financial statements will be important to investors when they decide to raise large(p) for the construction of the online manufacturing plant for the Solar-Electro division. Likelihood of financial difficulties 1.The Solar designer locomotive business uses technology that is constantly changing, making it to a greater extent dotty than other businesses. token 1 raises a reside active the viability of the Solar-Electro division but not necessarily the stainless company. 2.Item 7 indicates in that respect is a debt pact requiring a electric flowing ratio above 2.0 and a debt to equity ratio a t a junior-gradeer place 1.0. the current ratio is 1.72. this could result in the loan cosmos called unless a waiver of the loan covenant is granted. Management integrity 1.The attendant should have done large research before pass judgment the client, however there is no indication of any direction integrity issues. Item 6- states that it was discovered that upper level employees from the inhering audit department have a high turnover rate rate.

It could be delinquent to intentional fraudulent financial reporting. B) delightful audit put on the line is likely to be medium to low because of t he factors listed, especially the current de! bt covenant violation. As a for the first time course of study audit, it is preferable to have a lower congenial risk. C)Inherent RiskAccount or accounts affected 1.No inherent risk 2.Possibility of obsolete inventoryInventory, price of goods change Affecting the valuation of inventory at the Lower cost. 3. guess party riskManufactoring equipment, Footnote Affects the valuation of the transaction and may contain disclosure as a related party t ransaction 4.- 5....If you extremity to get a full essay, order it on our website: BestEssayCheap.com

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