Question

Part 4: (75 words) For physical controls, independent internal verification, and human resource controls, describe a real life business example of a cash receipt control. Explain how the cash receipts are being protected by each cash receipt control.

Part 4: (75 words) Go to a finance/investing site such as Morningstar.com or yahoo.com and “analyze” the Ch5 -profit margin and gross profit ratios for a public corporation and its competitor. For each ratio, describe if the company is doing well in comparison to its competitor’s ratio results.

any american public company

Answer 1

A)Cash is the most liquid asset compared to any other asset. Businesses suffer if they do not have adequate controls over cash transactions. People have a chance to defalcate the cash which was not been properly accounted. The following are few cas receipt controls that a company must possess.

1) accurately accounting all the cash transactions. 2) company must not hold too much of idle cash, since it can be invested elsewhere in return for interest. 3) Required Cash must be available to make necessary payments. 4) prevent loss of cash due to theft or fraud.

Companies also protect the cash by. 1) segregation of work. 2) Rotation of employees 3) Specific duties to specific employees 4) password protection 5) Maintaining a record of cash receipts as soon as received.

B) As on Dec 2016 Yahoo.com has a gross profit of US $ 2,450,241 revenue of US$5,169,135 . It also has a gross profit margin of 47.40%. The company is doing well compared to its competitors

Profitability ratios: Yahoos profit is far better than its competitors. However it's return on equity and return on assets is quite low compared to its competitors.

Gross profit margin 47.4% . Operating profit margin -12.48% . Net profit margin -4.15%. Return on investment -0.69 and Return on assets -0.45%