Your Firm Has Just Acquired a New Audit Client

Multiple Choice

Your firm has just acquired a new audit client. The new client is highly leveraged with borrowing from several institutions. It is planning to expand the business by obtaining additional debt finance in the near future. Based on these facts, which one of the following should be most carefully examined?

A) Transactions that result in healthy revenues
B) Large market capitalization
C) Loans and other financing transactions between related entities
D) Dividend paid out in the previous year