1A. When analytical procedures disclose unexpected changes in financial relationships relative to prior years, the auditors consider the possible reasons for the changes. What are possible reasons for the significant changes in the following relationships:

• The rate of inventory turnover ratio (ratio of cost of goods cold to average inventory) has declined from prior years rate.
• The number of days dales in accounts receivable has increased over the prior year.

1B. There are many types of analytical tools available to the auditor to help them analyze a company. Many times, the auditor will use Financial Ratios to aid in this process. What are some of the classifications of ratios that can be used and what are the key ratios within those classifications?