Acc 561 Week 3 Ratio Analysis Assignment Paper

Ratio Analysis: P. Jason CorporationChristina ForresterACC/561Tutor’s Name12/04/2017Why the Financial Statements Should Be AuditedThe main reason for having financial statements audited arises from the fact that the persons responsible for preparation of financial statements are different from the users of the financial statements and owners of the business. Although in small owner managed businesses, the owners may have intimate knowledge of the affairs of their business, it is necessary to have a third person audit the financial statements of the enterprise.External verification by auditors is essential because it provides a reasonable assurance that the financial statements are free from material errors and misstatements. Such an assurance will confer the financial statements credibility that they can be relied on to present a true and fair view of the affairs of the company (Healy & Palepu, 2013).Implications of the ratios providedThe current ratio has improved from 2.1 times in 2016 to 3.1 times in 2017. Current ratio measures the ability of a company to pay short term obligations. The current ratio is relevant to the lending decision because it provides an indication on the borrower’s ability to