HP Company Prevention Strategy

For this assignment, you will add an abstract and proposed implementation to your research paper, which will include a detailed description of your prevention strategy. Finally, you will further refine the report and produce the final draft version. Updates may be based on peer and instructor feedback.The project deliverables are as follows:Update the research document’s title page with a new date.Update previously completed sections based on your instructor’s feedback.Complete the following for your Management Research Document:Review the entire document for any changes and improvements you would like to make.Ensure that this final version of the document is sufficiently detailed to fully meet the assignment requirements for each part of the course.Add the following new content:Compilation of Findings, Conclusions, and RecommendationsDevelop and incorporate an abstract into the final draft of the research paper.Produce a final proposed plan for implementation of the solution.Include a detailed prevention strategy.Be sure to update your table of contents before submission.Name the document “yourname_ACCT650_IP5.doc.”Please submit your assignment. Please include references. DELIVERABLE LENGTH: 7,500–13,500 total words.Please use the following docs below to assist in completing the document. If more clarification is needed please ask. Thanks.


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Candace Dease
CTU Online
Unit 2 – Individual Project
Professor: M. Huber
Dec. 1, 2017
This paper will focus on analyzing the financial ratios of the Hewlett-Packard Company
which is commonly referred to as the HP Company. This company is a technology corporation
that split into two separate companies in the year 2015: that is the Hewlett-Packard’s computer
and printer business and the Hewlett Packard Enterprise, which is basically an enterprise-focused
product and service organization.
Financial analysis is a key factor of consideration by all investors prior to investment.
They are therefore crucial for making the management decisions by the managers. Financial
analysis is basically referred to as the process of evaluating projects, businesses, budgets and
other entities related to finance as to find out their level of performance and suitability. The
Quantitative financial analysis of the business will involve the use of financial ratios so as to
evaluate figures such as sales revenue, profit margins or return on assets (ROA) so as to enhance
decision making in respect to funds within an organization. The investors of the HP company
conduct, financial and quantitative analysis before investing so as to determine whether the
company is stable, solvent, liquid or profitable enough to secure and warrant a monetary
investment. It is important to note that when looking for a specific company, a financial analyst
conducts analysis by examining the company’s balance sheet, income statement, and cash flow
statement. (Brigham, Eugene F., and Ehrhardt, 2013)
These managers and investors analyze the company’s financial data by calculating ratios
from the data and comparing them with the company’s own historical performance or against
those of other companies in the same industry. These will help in making the management
Liquidity Ratios.
Liquidity ratios are used by the investors to measure the company’s ability to meet its
short-term maturing obligations as and when before due. The lower the ratio, the higher the
liquidity risk and vice versa. Failure to meet short-term liabilities due to lack of liquidity may
lead to poor creditworthiness, litigation by creditors and insolvency. The liquidity ratios relevant
to the financial analysis of the HP company are the current ratio, cash ratio and the acid test or
quick ratio. The current ratio is computed by dividing total current assets by total current
Current ratio= current assets /current liabilities.
In respect to the HP company,
Current Ratio= CA/CL
Cash ratio= cash + securities/current liabilities
If the current ratio of the company is more than one, then the company has more current assets
than current liabilities hence it can meet its short-term liabilities when they fall due. The current
ratio of the company is 1.93 hence it is suitable for investment. The managers also use the acid
test or quick ratios which is calculated by dividing total current assets excluding stock by current
liabilities to ascertain the satisfactory of the current ratio.it is important for the managers to
always remember that the company with a satisfactory current ratio may actually be in poor a
liquidity position when stock form the most of the total current assets
Acid test ratio=current assets¬-stock/current liabilities
The Acid test ratio of the HP company is computed as;
QUICK RATIO=quick assets/current liabilities
This basically makes the company stable and able to meet its financial debts when they fall due
since the ratio is more than one. The cash ratio of the company, which is more than one, also
indicates that it has enough cash on hand to meet its current liabilities.
Leverage/solvency or gearing ratios
The financial analysis also employs the use of leverage/solvency or gearing ratios to
measure the extent to which these companies use their assets which have been financed by nonowner supplied funds. These ratios basically help the company managers to measure the
financial risk of the company. The higher the ratio the higher the financial risk. It is important to
note that the term gearing refers to amount debt finance a company uses in relation its equity
finance. The gearing or leverage ratios used managers to formulate management policies and
decisions include the debt ratio or capital gearing ratio and the debt-equity ratio. The debt ratio
or capital-gearing ratio is used by the investors to measure the proportions of non-owner finance
to capital employed by a company. A company is highly geared if the ratio is greater than 50%.
Debt ratio=total long-term debt/capital employed *100
The debt ratio of the HP Company is;
Debt to equity ratio=debt/equity
This implies that the company is lowly geared hence it has more equity than debts which makes
it suitable for control and ownership by the shareholders because their ownership is not highly
diluted by the debts.
The managers also compute the debt-equity ratio so as to measure the proportion of non- owner
supplied funds to owner’s contribution to the company .under this ratio, the companies are said
to be highly geared if the debt-equity ratio is greater than 100%
Equity ratio =equity/total assets
This is an indication that the company is not highly geared.
The managers of the HP company also employees the profitability ratios so as to measure the
management’s effectiveness as shown by returns generated on sales and investments. These
ratios basically indicate how successful the management has been in generating the profits of the
company. The most commonly used profitability ratios by these company managers are
discussed below.
Net Profit Margin Ratio = Net Income/Net Sales
Return on assets=Net income/total assets
= 134,196/713,871*100%=19%
Return on equity= NET INCOME/equity
The managers also compute the return on capital employed so as to determine the
efficiency with which a company uses long-term fund or permanent assets to generate returns to
shareholders. If the company effectively utilizes its long-term funds or permanent assets to
generate returns to its shareholders then it means that the investors are secure to invest in such
companies since they are able to make profits from the capital employed. The ratio is calculated
using the formula;
Return on capital employed =profit before interest and tax/total capital employed.
It is also necessary to conduct a trend analysis of the company so as to predict the future
movement of the performance of the company based on its past data. For example, the HP
company has maintained a strong and stable cash flow over the past years and its balance sheet
remains healthy and robust with S$ 358931 cash and bank balances. This analysis is usually
based on the idea that what has happened in the company’s past gives investors and managers an
idea of what will happen in its future. The trend analysis can be conducted under three
classifications which are; short-term, intermediate and long-term analysis. From the current longterm trend analysis of the HP company, it is evident that the company has a profitable and
consistent past performance in its respective operations and therefore the investors are more
willing to invest in the company both now and in future.
In order to evaluate the Develop, a growth or improvement opportunity for the company, a
business analysis based on activity ratios and investment ratios can be conducted as discussed
Prior to the investment, the investors evaluate the activity ratios of the public limited companies
like the HP company so as to determine the efficiency with which the company uses the assets to
generate sales .these ratios are also called turnover ratio since they indicate the rate at which
assets are converted into sales. The commonly used activity ratios by the managers of the HP
company are the debtor turnover and the creditors turnover .the debtors turn over shows the
number of times debtors pay within the financial year. The ratio will, therefore, indicate the
efficiency at which the company is managing its credit .the higher the ratio the more efficient
management is in managing its credit policy. The investors are therefore interested in investing
in companies with higher debtor’s turnover ratio. The investors are also interested in determining
the creditors turn over ratios of the HP company so as to indicate the number of times creditors
are paid by a particular company during a financial year
Creditors turn over=credit purchases /average creditors
The investors are usually interested in investing in companies with higher creditors turn
over since such companies are not highly geared hence the return on the investor’s funds is likely
to be high.The Investment or equity ratios are also used to determine the rate of return on
investment to be set by the managers for the company investors to use. Prior to the investment,
the investors in seek to analyze and evaluate the investment ratios so as to determine the overall
performance of the company for example to determine the company’s dividend policy, to
determine the theoretical value of company’s security and predicting the effects of the rights
issue. The most used investment or equity ratios are drawn by the managers to be used by the
investors include the, earning per share and the dividend yield
The managers calculate the earnings per share to determine the amount shareholders expect to
generate in form of earnings for every share invested .This shows the profitability of a company
on a per share basis
Eps=earnings attributable to equity shareholders /number of ordinary shares
The investors will, therefore, be tempted to invest in companies with higher earnings per share
such as the HP company. The managers also compute the dividend yield ratio of the company
before investing so as to determine how much they should pay the shareholders to inform of cash
dividends for every share purchased or invested in a company (Bodie, Zvi, Kane, and Marcus,
Dividend yield=dividend per share /market price per share*100
This analysis will be used by the managers to accept or reject any proposed business investment
opportunities. If the ratios give a favorable indication of low risks and a high rate of return, the
proposed investment projects will be executed immediately. Risk analysis and evaluation is a
very important aspect of to be considered by all managers before making the company’s
investment decisions. This is because if the risk of the investment is too high, then the managers
are more likely to make losses. This implies that under a higher risk investment, cash flows and
resale values generally will not matter since the investment is considered worthless. In order to
evaluate risk of investment in the HP Company’s projects, the following formula is used;
Risk = Rate of occurrence x the impact of the event.
The managers will, therefore, be expected to venture into projects that have low risks of
investment so as to increase their security of gaining returns from such investments (Aven and
Terje, 2015).
Aven, Terje. Risk analysis. John Wiley & Sons, 2015.
Bodie, Zvi, Alex Kane, and Alan J. Marcus. Investments, 10e. McGraw-Hill Education, 2014.
Brigham, Eugene F., and Michael C. Ehrhardt. Financial management: Theory & practice.
Cengage Learning, 2013.
Institution: Colorado Technical University – Online
Name: Candace Dease
Course: ACCT650-1704B-01
Assignment: Unit 4 IP
Date: December 13, 2017
Audit Scope
This audit will encompass Human Resources Management processes
concerning governance, internal control and risk management related
to staffing rules and regulations, procedures and practices that have
been set up by the organization.
Audit Objective
The objective of the audit was to provide assurance that governance and
internal controls to mitigate critical HR management risks have been set up,
and are working effectively to meet the needs of the organization.
Audit Risk
? Risk of losing auditor’s independence because of having to interact with the
employees who are human(one has to be human when auditing human).
? Risk of failing to get proper time to engage with the employees and
management staff.
? Risk of failing to identify weaknesses of employees, since they can put
some mechanisms to cover up their actions or even put up a pretentious
look while being audited.
Audit Planning Procedures
? Create an audit engagement letter and send to relevant management.
? Have an opening meeting with management.
? Adjust the Audit Program based on new changes prior audit
Audit Procedures
? Filing and document audit including the companies critical
regulations and rules of References, meeting minutes and records of
made decisions, employees job profiles, staffing documents,
company’s intranet site, staffing procedures guides.
? Interviews with key stakeholders within the company in particular
the Senior Human resource management, Departmental HR
management, HR customers and HR Advisors.
? Conduct an examination of the staffing procedures of the company.
? Control testing of a sample of staffing documentation available in
the organization HR department.
Fill the Audit Work-paper
Fill the audit work paper file and submit them to the head auditor for review.
Complete Business Best Practice form
All the issues found out in the audit should be added to the Business Best
Practice (BBP) file. Establish that all issues are
documented suitably.
Prepare and Disseminate Audit Report Draft
Set up a draft rendition of the Audit report. Guarantee that every critical
recommendations are incorporated into the report.
Obtain Management Responses
Acquire an administration’s reaction to all proposed recommendations. Survey
reactions to guarantee they address all issues distinguished by the Audit.
Obtain Approval and Distribute Final Report
Acquire the CFO’s endorsement of report. Disseminate final Audit report to the
Gray, I., Manson, S., & Crawford, L. (2015). The audit process. Andover,
Hampshire, U.K.: Cengage Learning.
Senft, S., Gallegos, F., & Davis, A. (2013). Information technology control and
audit. Boca Raton, FL: CRC Press.
Wright, W. (1976). Discussion of Expert Judgment in Audit Program
Planning. Journal Of Accounting Research.
Vaicekauskas, D., & Mackevicius, J. (2014). Developing a framework for audit
quality management in audit firms. Zeszyty Teoretyczne Rachunkowosci.

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