Crazy Eddie

tempestuous Eddie Case Questions 1. Compute key ratios and other pecuniary measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the trigger-happy bowling pins in Crazy Eddies financial statements that suggested the firm present a higher-than-normal level of audit risk. There were several deprivation flags in Crazy Eddies financial statements. The companys higher-than-normal level of audit risk can be refractory by completing a ratio analysis of the financial statements. An analysis of key ratios over the period of 1984 to 1987 would give birth resulted in red flags. Crazy Eddies change in assets among this period is one red flag that an auditor should get under ones skin noticed. Short-term investments had a zero balance until 1986 when it dramatically change magnitude to 21.1 and then dramatically increased again to 41.4 in 1987. At the same time funds on hand slaverped from 34 in 1985 to 3.2 in 1987, which is a troubling sign. The saying goes that cash is king. Crazy Eddie was rapidly expanding the number of stores and was not anticipating what could happen in the future. Competition greatly increased and Crazy Eddie did not have the funds to pay suppliers for merchandise, which in turn causes potential customers to go elsewhere for their needs.

Basically, the industry had become saturated with retailers and the company could no longer extract sweetheart deals from suppliers. After seeing this drop in cash, an analysis on merchandise inventories is needed. From 1984 to 1987, merchandise inventories fall from 63.8 to 37, which is another red flag that should have been investigated. Crazy Eddie is a retailer and retailers sell merchandise to customers so record is extremely important. This could have been a sign that blood line was misstated. As it turns out, Crazy Eddie had a huge overstatement of the companys inventory and personnel systematically destroyed incriminating documents to conceal inventory shortages. The age of the inventory was also a red flag that should have... If you want to get a full essay, order it on our website: Ordercustompaper.com

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