Connect with Gabriel
Hi, my name is Gabriel and I am a CPA tutor. I have successfully helped many students pass different parts of the CPA exam. Recently, I've tutored for far financial accounting reporting in audit. Those are my two favorite of the four parts of the exam. I am a licensed, cpa, by the way, in Kentucky. You can look me up.
To give an example of what I tutored, I like to work with my students on all a variety of topics, but when it comes to my mind, it's the different ratios. The different ratios measures the performance of the business. It tells you whether or not a pro business is doing well or business is, not doing so well or struggling. One of the ratios that come to mind is the accounts receivable turnover ratio. The accounts receivable ratio tells you how well you're collecting your accounts receivable. A higher turnover ratio indicates you're doing well and a lower ratio indicates you're not doing so great.
Oftentimes an auditor will take your ratio and they will compare it to the industry and see how well you're doing. Another thing that we look at for the ratio to see if the ratio is too low or too high. One way that, a ratio could be too low is when a company, makes fictitious credit sales. Fictitious credit sales, yes, they make your sales look higher. So you look better to the auditor with your sales. But the thing is, it lowers your accounts receivable turnover ratio.
Lower accounts receivable, turnover over ratio was not a good thing either because that means you're not collecting on your debts and possibly, that debt may need to be written off. We work on other ratios to include current ratio, debt, equity ratio, profit margin, and all the different ratios that shows the performance of a business. Look forward to tutoring.