One of your audit clients manufactures fishing boats and sells them all over the country. Boats are sold to dealers who finance their purchases on a floor-plan basis with their banks. The banks usually pay your client within two weeks of shipment. The company's profits have been increasing over the past several years. To perform preliminary analytical proceduresyou have obtained the following information related to your 2012 audit ($ in millions):

Required
a. From the data shown, identify potential risk areas and explain why they represent potential risks.
b. Suggest possible explanations for any unexpected results.
c. What inquiries and follow-up audit procedures might be performed to determine the accuracy of the client's data?
d. How might the CFO use accounts receivable and inventory to conceal the embezzlement of cash?
e. Discuss the importance of professional skepticism when performing preliminary analytical procedures.

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Major Competitor (2012) 2012*2011 2010 20092008* Accounts Receivable Inventory Accounts Payable Sales Gross Profit % Number of Days' Sales 3.3 16.0 10.0 2.6 84.777.9 19% 17% 16 6.8 2.3 7.2 1.9 1.8 5.5 1.5 1.7 5.1 1.4 56.8 43.639.8 18% 17% 18% 16 4.2 13.9 3.2 3.1 110.3 21% 14 29 15 16 in Receivables Number of Days' Sales 69 47 46 46 47 46 in Ending Inventory