Crazy Eddie Case Questions 1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm posed a higher-than-normal level of audit risk. There were several red flags in Crazy Eddie’s financial statements. The company’s higher-than-normal level of audit risk can be determined by completing a ratio analysis of the financial statements. An analysis of key ratios
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CASE 1.8 Crazy Eddie‚ Inc. In 1969‚Eddie Antar‚ a 21-year-old high school dropout from Brooklyn‚ opened a consumer electronics store with 150square feet of floor space in New York City 1 Despite this modest beginning‚ Antar would eventually dominate the retail consumer electronics market in the New York City metropolitan area. By 1987‚Antar’s firm‚ Crazy Eddie‚ Inc.‚ had 43 retail outlets‚ sales exceeding $350 million‚ and outstanding stock with a collective market value of $600 million. Antar
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Crazy Eddie‚ Inc. Common Size Balance Sheets March 1‚ 1987 March 1‚ 1986 March 1‚ 1985 May 31‚ 1984 Cash 3.17% 10.47% 33.99% 3.76% Short-term investments 41.36% 21.14% 0.00% 0.00% Receivables 3.68% 1.77% 4.18% 7.12% Merchandise inventories 36.99% 47.16% 40.51% 63.83% Prepaid expenses 3.61% 1.86% 0.98% 1.41% Total current assets 88.81% 82.40% 79.66% 76.12% Restricted cash 0.00% 2.64% 10.77% 0.00% Due from affiliates 0.00% 0.00% 0.00% 15.69% Property‚ plant and equipment
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CRAZY EDDIE ANALYSIS In 1969‚ Eddie Antar‚ a 21-year-old high school dropout from Brooklyn‚ opened a consumer electronics store with 150 square feet of floor space in New York City. In spite of this modest beginning‚ Antar would eventually dominate the retail consumer electronics market in the New York City metropolitan area. Crazy Eddie Inc. was a retail consumer electronics store in New York City‚ by 1987; Crazy Eddie Inc. had 43 retail outlets‚ sales exceeding $350million‚ and outstanding stock
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Crazy Eddie Tables of Contents Issues…………………………………………………………………………………………………………….III-V Facts..…………………………………………………………………………………………………………….VI-IX Analysis…………………………………………………………………………………………………………X Recommendations………………….…………………………………………………..………………….XI References.…………………………………………………………………………………………………….XII Issue 1) Red flags were the increase on short-term investment receivables why would an electronic company
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crazy eddiCase 1.8 Crazy Eddie‚ Inc. Term A2/Spring 2013 March 19‚ 2013 Table of Contents Issues…………………………………………………………………………………………...3 Facts…………………………………………………………………………………………….4 Analysis and Conclusions…………………………………………………………………….6 Conclusions…………………………………………………………………………………….9 Issues 1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm possess a higher-than-normal
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Crazy Eddie 1. 2 . If better‚ more complete audit procedures were performed‚ it is likely that many of the major accounting irregularities and fraudulent practices could have been uncovered. a) The falsification of inventory count sheets: The auditors could have conducted full physical inventory counts‚ or performed random inventory counts at warehouses or stores undisclosed to the management at Crazy Eddie prior to the tests. This would have prevented the management from strategically
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Katherine Bokovsky Wai Shan Leung Auditing – Crazy Eddie Case The main critical issue in the Crazy Eddie case is the incompetence and lack of professional skepticism of the company’s audit team and their inability to successfully comply with the standards of GAAS. The auditors failed to exercise the fundamentals of the substantive audit plan which would have uncovered at least some of the fraud. Furthermore‚ this inability and lack of knowledge on how to properly execute an audit threatened
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Crazy Eddie‚ Inc. financial fraud case Crazy Eddie was an American retail store chain run by the Antar family‚ which was established as a private company in 1969 in Brooklyn‚ New York by businessmen Eddie and Sam M. Antar. The fraud at Crazy Eddie was one of the longest running in modern times‚ lasting from 1969 to 1987. Crazy Eddie became a known symbol for corporate fraud in its time‚ but has since been eclipsed by the Enron‚ Worldcom and Bernie Madoff accounting scandals. Commencement of fraud
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Eddie Antar‚ the CEO of the Crazy Eddie Discount Electronics Chain. In 1993 Eddie was convicted for an $80 million stock fraud and after that his business collapse. Before the company went public in 1984 Eddie and two brothers were accused of putting together a scheme and inflated the value of the company. In 1990 Mr. Antar was on the run because the government charged‚ off millions and they found him in June 1992 in Israel then they extradited back to the United States. When Antar was 45 years old
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