There has been a significant degeneration over a three ears period from 6.3 to 1.3 which is currently below the industry average which is documented at 4.50. These figures as stated shows the potential of Indianola Pharmaceutical could face future slumps within their operations or volatility in their interest rates. Unlike other ratios debt/equity ratio has increases dramatically over the past three years. Although there was a steady increase this is not a positive trend for Indianola Pharmaceutical because the firm’s debt allocated to financing their assets in relative terms to the value epitomized in their shareholder’s equity. The cost of goods sold at Indianola Pharmaceutical has decreased over the past three year period to presently 38.5% which is below industry average which is 44.5%. The information figures indicated in the cost of goods sold represents the cost that is associated with obtaining raw material and all additional costs that is necessary to get the medicine available for sale to customers. The reduction in cost of goods sold could indicate that Indianola Pharmaceutical would have a higher gross margin for their sales less cost of goods …show more content…
The information that would be necessary to be accumulated for a success audit of Indianola Pharmaceutical would involve gathering of the necessary information from Indianola Pharmaceutical’s financial statement, central control systems, business and other external factors that affects Indianola’s operations. The main source for gathering would be from Indianola’s financial statements, ratios and notes at the end of the financial statements. The documented information would be recalculated, confirmed that they are within the standards of PCAOB and analyzed for significant deficiencies.
Additional sources of gathering information would be from past audits and also from past records with the Security and Exchange Commission. Industry information would also be helpful specifically patents that are pending or near ending in order to ascertain key industry strengths or weaknesses and ensuring that Indianola is within compliance with their short-term and long-term