Net profit is a good indicator of the efficiency of a firm. The net profit ratio or net profit margin ratio is determined by relating net income after taxes to net sales. Net profit here is the balance of profit and loss account which is arrived at after considering all non-operating incomes such as interest on investments, dividends received, etc. And non-operating expenses like loss on the sale of investments, provisions for contingent liabilities, etc.
This ratio is calculated using the following formula:
(Net Profit After Tax – Preference Dividend) / Equity Dividend
The completeness concept in auditing comes from the notion that the management asserts in the financial statement that all balances and transactions in the financial statements have been recorded.
During the audit, the auditor must perform the substantive procedures to ensure that all transaction and account balances have been recorded in the accounting records and financial statements. The test of completeness starts by tracing supporting documents such as sales invoices to the accounting ledgers and financial statements.