Based on the horizontal analysis and vertical analysis on the balance sheet, determine if there is any possibility of fraud or any illegal acts. Check is the analysis are done correct. Minimum a

Based on the horizontal analysis and vertical analysis on the balance sheet, determine if there is any possibility of fraud or any illegal acts.

Check is the analysis are done correct.

Minimum answer is 500 words.

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ABC Healthcare Equipment Company
Unaudited Financial Statements
(000’s Omitted)
Income Statement
Year Ended
July 31, 2007 July 31, 2008 July 31, 2009
Gross Sales
$50,000
$75,000
$147,000
Sales Returns & Allowances
$200
$210
$230
Net Sales
$49,800
$74,790
$146,770
Beginning Inventory
$8,000
$18,750
$27,500
Purchases
$25,000
$37,500
$73,500
Ending Inventory
$18,750
$27,500
$26,675
Cost of Goods Sold
$14,250
$28,750
$74,325
Gross Margin
$35,550
$46,040
$72,445
G & A Expenses
Advertising
$4,000
$3,500
$2,950
Contract Labor
$2,400
$4,250
$3,500
Depreciation
$200
$180
$160
Equipment Rental
$13
$13
$13
Labor
$3,000
$2,500
$2,750
Legal & Accounting
$1,000
$1,200
$1,050
Other
$600
$800
$1,098
Sales Taxes
$990
$825
$1,361
Total G & A Expenses
$12,203
$13,268
$12,882
Net Income Before Taxes
$23,347
$32,772
$59,563
Income Taxes
$7,938
$11,142
$20,251
Net Income After Taxes
$15,409
$21,630
$39,312
Earnings Per Share
$154.09
$216.30
$393.11

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ABC Healthcare Equipment Company
Unaudited Financial Statements
(000’s Omitted)
Balance Sheet
Horizantal Analysis
Year Ended
July 31, 2007 July 31, 2008 July 31, 2009
2007 % change
2008 % change
Cash
$20,030
$1,086
$954
$(0.95)
$(0.12)
Trade Receivables
$25,000
$57,803
$98,108
$1.31
$0.70
Inventories
$18,750
$27,500
$26,675
$0.47
$(0.03)
Other
$43
$62
$84
$0.44
$0.35
Total Current Assets
$63,823
$86,451
$125,821
$0.35
$0.46
Fixed Assets
$5,000
$5,000
$5,000
$-
0
Accumulated Depreciation
$2,300
$2,480
$2,640
$0.08
$0.06
Net Fixed Assets
$2,700
$2,520
$2,360
$(0.07)
$(0.06)
Total Assets
$66,523
$88,971
$128,181
$0.34
$0.44
Accounts Payable
$1,563
$2,292
$2,223
$0.47
$(0.03)
Accrued Expenses
$1,017
$1,106
$1,074
$0.09
$(0.03)
Total Current Liabilities
$2,580
$3,398
$3,297
$0.32
$(0.03)
Long Term Debt
$30,053
$30,053
$30,053
$-
0
Total Liabilities
$32,633
$33,451
$33,350
$0.03
$(0.00)
Common Stock
$100
$100
$100
$-
0
Paid In Capital
$20,000
$20,000
$20,000
$-
0
Retained Earnings
$13,790
$35,420
$74,731
$1.57
$1.11
Total Liabilities & Equity
$66,523
$88,971
$128,181
$0.34
$0.44
Vertical analysis
2007
2008
2009
Cash
0.301098868
0.012206225
0.007442601
Trade Receivables
0.3758098703
0.649683605
0.765386446
Inventories
0.281857403 0.3090894786
0.208104165
Other
0.000646393
0.000696856 0.0006553233
Total Current Assets
0.959412534
0.971676164
0.981588535
Fixed Assets
0.075161974
0.056198087 0.0390073412
Accumulated Depreciation
0.034574508
0.027874251
0.020595876
Net Fixed Assets
0.040587466 0.0283238359
0.018411465
Accounts Payable
0.0234956331
0.025761203 0.0173426639
Accrued Expenses
0.015287946
0.012431017
0.008378777
Total Current Liabilities
0.038783579 0.0381922199
0.025721441
Long Term Debt
0.451768561
0.337784222
0.234457525
Total Liabilities
0.4905521399
0.375976442
0.260178966
Common Stock
0.0015032395
0.001123962
0.000780147
Paid In Capital
0.300647896
0.224792348
0.156029365
Retained Earnings
0.207296724
0.398107248
0.583011523
Total Liabilities & Equity
1
1
1

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