ACCT 3596: Auditing

Just For FEET, Inc.
Case Analysis: Case 1.2 #1-3, 5
Beka Vinogradov
Seat #1

2011

1 Beka Vinogradov
ACCT 3596: Case Analysis

#1. Common-Sized Balance Sheets.

1996

Just for FEET, Inc.
Balance Sheet
Years ending Jan 31st
1997

1998

36.93%
9.04%
1.74%
35.47%
0.56%
83.75%
14.61%

18.40%
0.00%
3.53%
45.97%
1.50%
69.40%
21.08%

1.80%
0.00%
2.74%
58.01%
2.65%
65.20%
23.29%

0.00%

8.05%

10.31%

1.64%
100.00%

1.46%
100.00%

1.19%
100.00%

26.61%
10.35%
1.46%
0.11%

20.22%
11.41%
2.07%
0.30%

0.00%
14.55%
3.60%
0.13%

0.56%

0.72%

0.96%

39.09%
2.76%
41.85%

34.73%
5.48%
40.21%

19.25%
33.51%
52.75%

0.00%
50.69%
7.47%

0.00%
48.76%
11.03%

0.00%
36.20%
11.04%

58.15%

59.79%

47.25%

100.00%

100.00%

100.00%

Current Assets:
Cash & Equivalents
Marketable Securities AFS
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Property & Equipment, net
Goodwill,
net
Other
Total Assets
Current Liabilities:
Short-Term Borrowings
Accounts Payable
Accrued Expenses
Income Taxes Payable
Current Maturities of LT
Debt
Total Current Liabilities
LT Debt & Obligations
Total Liabilities
Shareholders' Equity:
Common Stock
Paid-In Capital
Retained Earnings
Total Shareholders'
Equity
Total Liabilities & SH'
Equity

2 Beka Vinogradov
ACCT 3596: Case Analysis

#1. Common-Sized Income Statements.

1996
100.00%

Just for FEET, Inc.
Income Statement
Years ending Jan 31st
1997
100.00%

1998
100.00%

57.54%

58.46%

58.38%

Gross Profit

42.46%
0.23%

41.54%
0.23%

41.62%
0.17%

Store Operating
Store Opening Costs
Amortization of
Intangibles
General &
Administrative
Total Operating
Expenses
Operating Income

27.04%
4.38%

29.18%
1.41%

30.01%
1.76%

0.07%

0.25%

0.27%

3.07%

3.77%

3.14%

34.57%

34.60%

35.18%

8.12%

7.17%

6.61%

Interest Expense
Interest Income
EBIT & ∆ Acct. Principle

-0.32%
1.85%
9.65%

-0.30%
0.29%
7.15%

-1.04%
0.02%
5.59%

Provision for Income Taxes
Earnings prior to ∆ Acct. Principle

3.43%
6.22%

2.68%
4.47%

2.15%
3.44%

Prior Year ∆ Acct. Principle
Net Earnings

-0.80%
5.43%

0.00%
4.47%

0.00%
3.44%

Net Sales
Cost of
Sales
Other Revenues
Operating Expenses:

3 Beka Vinogradov
ACCT 3596: Case Analysis

#1. Key liquidity, solvency, activity, and profitability ratios (1997, 1998).
1997

1998

$ 172,746
$ 146,914
1.1758308
$ 179,299
$ 146,914
1.2204351
$ 314,743
$ 146,914
2.1423622

$ 82,490
$ 155,706
0.5297805
$ 98,330
$ 155,706
0.6315107
$ 311,167
$ 155,706
1.9984265

$ 256,397
$
6,553
39.12666
365
39.12666

$ 478,638
$ 15,840
30.217045
365
30.217045

A/R Turnover

9.3286778

12.079275

Days to Collect
Receivables

$ 147,526
$ 133,323
1.1065308
365
1.1065308
329.85979

$ 279,816
$ 206,128
1.3574866
365
1.3574866
268.87926

$ 157,278
$ 218,556
0.7196233
$ 20,825
$
(832)
-25.030048

$ 180,268
$ 268,084
0.672431
$ 34,296
$ (1,446)
-23.717842

Cash Ratio

Quick Ratio

Current Ratio

Inventory Turnover

Days to Sell Inventory

Debt to Equity

Times Interest Earned

4 Beka Vinogradov
ACCT 3596: Case Analysis

$

13,919
?

$

21,403
?

$ 37

EPS
$ 108,871
$ 256,397
0.4246189
$ 20,825
$ 256,397
0.0812217
$ 24,743
$ 375,834
0.0658349
$ 24,743
$ 218,556

$ 198,822
$ 478,638
0.4153912
$ 34,296
$ 478,638
0.0716533
$ 34,220
$ 448,352
0.076324
$ 34,220
$ 268,084

0.1132113

0.1276466

Gross Profit %

Profit Margin

Return on Assets

Return on Common
Equity

#1. High-risk financial statement items.
Based on the information given in the case and the data calculated (above), there are multiple high-risk financial statement items for the 1998 audit of Just for FEET, specifically