Sampling and testing
bkaneh
Kha_AvonInc.Mod3.xlsxRisk Analysis
| Avon-make-up company | |||
| Been in business for over 130 years | |||
| Risk: | Estimated impact | Estimated likelihood | |
| Strategic: each season has its big sellers | low | med | |
| Compliance: the rules of testing the make-up and the other products | med | low | |
| Operational: keeping track of all of the outside sales | high | high | |
| Financial: being able to finance the testing and the adverstising of the products | med. | med | |
| Legal: | low | low | |
| Reputational: must keep all customers happy | high | high | |
Income Statement
| Income Statement | |||
| 2017 | 2016 | 2015 | |
| Net Sales | $5,565.10 | $5,578.80 | $6,076.50 |
| Cost of Goods Sold | $2,203.30 | $2,257.00 | $2,445.40 |
| Gross Profit | $273.30 | $321.90 | $165.00 |
| Operating Expenses | $26.60 | $171.00 | $73.70 |
| Income from Operations | $273.30 | $321.90 | $165.00 |
| Other Revenue and Gains | $150.50 | $138.90 | $84.00 |
| Other Expenses and Losses | $26.60 | $171.00 | $73.70 |
| Income before Income Taxes | $120.70 | $31.20 | $22.70 |
| Income Taxes | -$100.70 | -$124.60 | -$819.20 |
| Net Income | $22.00 | -$107.60 | -$1,148.90 |
| Earnings per share | $439.70 | $437.00 | $435.00 |
| Assets | |||
| Current Assets | |||
| Cash and Equivalents | $881.50 | $654.40 | $686.90 |
| Net Receivable | $457.20 | $458.90 | $443.00 |
| Inventory | $598.20 | $586.40 | $296.10 |
| Other current assets | $296.40 | $291.30 | $291.10 |
| total Current Assets | $2,233.30 | $1,992.30 | $2,341.10 |
| Property, plant, & Equip | $702.70 | $711.30 | $766.90 |
| Total Assets | $3,697.90 | $3,418.90 | $3,879.50 |
| Liabilities | |||
| Curriet Liabilites | $25.70 | $18.10 | $55.20 |
| Payables | $832.20 | $768.10 | $157.60 |
| Short term/current long term debt | |||
| Other current liabilities | $1,375.40 | $1,447.10 | $2,020.50 |
| Total current liabilities | $1,559.60 | $1,485.70 | $2,195.10 |
| long-term debt | $1,872.20 | $1,875.80 | $2,159.60 |
| Total Liabilities | $3,944.80 | $3,810.40 | $4,935.90 |
| Stockholders' Equity | |||
| Common Stock | $189.70 | $188.80 | $187.90 |
| Additional PICap | $2,291.20 | $2,273.90 | $2,254.00 |
| Retained Earnings | $2,320.30 | $2,322.20 | $2,448.10 |
| Total Stockholders' Equity | -$714.70 | -$836.20 | -$1,056.40 |
| Total Liab & Stockholders' Equity | $3,697.90 | $3,418.90 | $3,870.40 |
Analytic Ratios
| Avon Inc. | |||
| Ratio Analysis | |||
| Recent Year | Year - 1 | Year -2 | |
| Short Term Debt | |||
| Cash Ratio | 0.57 | 0.44 | 0.31 |
| Quick Ratio | 0.63 | 0.65 | 0.85 |
| Current Ratio | 1.43 | 1.34 | 1.07 |
| Liquidity | |||
| A/R Turnover | 9.40 | 12.37 | 9.13 |
| Days to collect A/R | 39 | 30 | 40 |
| Inventory Turnover | 3.68 | 3.85 | 3.92 |
| Days to sell Inventory | 99 | 95 | 93 |
| Long-Term Debt | |||
| Debt to Equity | -5.44 | -4.49 | -4.60 |
| Times Interest Earned | 0.14 | -0.79 | -9.51 |
| Profitability | |||
| Earning per Share | $0.41 | -$0.34 | -$3.63 |
| Gross Profit Percentage | 0.05 | 0.06 | 0.03 |
| Profit Margin | 0.05 | -0.02 | 0.03 |
| Return on Assets | 0.01 | -0.05 | -3.64 |
| Return on Common Equity | -0.03 | 0.13 | |
Horizontal
| Avon Inc. | |||||
| Horizontal Analysis of Income Statement | |||||
| Recent Year vs Year -1 | Year -1 vs Year -2 | Year -2 | |||
| $ Change | % Change | $ Change | % Change | $ | |
| Net Sales | -13.7 | 2.75% | -497.7 | 35.65% | -1396 |
| Cost of Goods Sold | -54 | 28.66% | -188.4 | 33.55% | -561.5 |
| Gross Profit | 3658.2 | 101.27% | 3612.3 | -2170.85% | -166.4 |
| Operating Expenses | 100.2 | -24.78% | -404.4 | 60.94% | -663.6 |
| Income from Operations | 89.5 | 1052.94% | 8.5 | -4.77% | -178.1 |
| Other Revenue and Gains | 11.6 | 21.13% | 54.9 | -60.00% | -91.5 |
| Other Expenses and Losses | -138.1 | -93.06% | 148.4 | -162.72% | -91.2 |
| Income before Income Taxes | -2.1 | 0.47% | -442.8 | 29.77% | -1487.5 |
| Income taxes | 225.3 | 32.44% | 694.6 | -253.60% | -273.9 |
| Net Income | 127.4 | 12.27% | 1038.2 | -136.48% | -760.7 |
| Earnings per share | $0.75 | 22.80% | $3.29 | ||
| Avon Inc. | |||||
| Horizontal Analysis of Balance Sheet | |||||
| Recent Year vs Year -1 | Year -1 vs Year -2 | Year-2 | |||
| $ Change | % Change | $ Change | % Change | $ | |
| Assets | |||||
| Current Assets | |||||
| Cash and Equivalents | 227.1 | -698.77% | -32.5 | 13.03% | -249.5 |
| Net Receivables | -1.7 | -10.69% | 15.9 | -21.90% | -72.6 |
| Inventory | 11.8 | -31.38% | -37.6 | 44.92% | -83.7 |
| Other current assets | 5.1 | -106.25% | -4.8 | 1.63% | -294.6 |
| Total Current Assets | 241 | -69.09% | -348.8 | 48.22% | -723.4 |
| Property, plant, & Equip | -8.6 | 15.47% | -55.6 | 20.60% | -269.9 |
| Total Assets | 279 | -61.79% | -451.5 | 26.29% | -1717.3 |
| Liabilities | |||||
| Current Liabilities | |||||
| Payables | 64.1 | -1050.82% | -6.1 | 19.00% | -32.1 |
| Short term/current long term debt | 4 | -1.28% | -311.8 | 92.91% | -335.6 |
| Other current liabilities | 2.2 | -0.33% | -666.2 | -454.74% | 146.5 |
| Total current liabilities | 73.9 | -10.42% | -709.4 | -1481.00% | 47.9 |
| Long-term debt | 60.5 | -14.86% | -407 | 11.96% | -3403.5 |
| Total Liabilities | 134.4 | -12.04% | -1116.4 | 313.95% | -355.6 |
| Stockholder's Equity | |||||
| Common Stock | 0.9 | 0% | 0.9 | 300.00% | 0.3 |
| Additional PICap | 17.3 | 86.93% | 19.9 | 43.17% | 46.1 |
| Retained Earnings | -$1.90 | 1.51% | -$125.90 | 10.03% | -1254.8 |
| Total Stockholder's Equity | 121.50 | 55.18% | $220.20 | -16.19% | -1360.1 |
| Total Liab & Stockholder's Equity | $279.00 | -61.79% | -$451.50 | 26.29% | -1717.3 |
Audit Plan
| The capital acquisition and repayment cycle regards to the payment to lenders transaction, interest-bearing debt, and the stockholders’ equity. This cycle appears to be more susceptible to material misstatement. Although the risk level tends to be set low by auditors, this transaction cycle deserves a closer examination because the current liabilities and total liabilities seem to fluctuate by large amounts according to the horizontal analysis. Also, the debt to equity ratio is negative, meaning the company has more debt or liabilities than they can cover in assets. Lastly, the shareholders' equity seems to fluctuate vastly according to the horizontal analysis. Therefore, it should be examined in further detail where their money is going and to whom. |
