Part I: Planning Analytical Procedures $($AU$-$C Section $315$ and AU$-$C Section $515)$

a$.$ Step $1$: Identify Suitable Analytical Procedures. Your audit senior has suggested that you should use the following ratios $($on an overall financial statement level$)$ for planning analytical procedures in the revenue cycle at PharmaCorp:

o$$ Gross margin: $($revenues$-$cost of sales$)/$revenues

o$$ Turnover of receivables: $($revenues$/$average accounts receivable$)$; for ease of computation simply use ending accounts receivable

o$$ Receivables as a percentage of current assets and as a percentage of total assets: $($accounts receivable$/$total current assets$)$ and $($accounts receivable$/$total assets$)$

o$$ Allowance for uncollectible accounts as a percentage of accounts receivable: $($allowance$/$accounts receivable$)$

Required: As part of Step $1,$ identify any other relevant relationships or trend analyses that would be useful to consider as part of planning analytics. Explain your reasoning.

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Excellent

Good

Satisfactory

Unsatisfactory

Identified and provided thoughtful explanations for adding at least three other planning analytics.

Identified and provided thoughtful explanations for adding at least two other planning analytics.

Identified and provided thoughtful explanations for adding at least one other planning analytics.

Did not identify or provide thoughtful explanation for adding any other planning analytics.