PROFESSIONAL SKEPTICISM with potential inventory obsolescence UFC How do you calculate those ratios? 7-19 LO 2,3 The following information shows the past two annual period of results for a fictional company, Jones Manufacturing, and a com parison with industry data for the same period. ANALYTICAL DATA FOR JONES MANUFACTURING Industry Prior % of Sales 100 20 60 Prior Period 1000 omitted) $10,000 $2,000 $6,000 $1,200 $500 6.3 Current Period (000 omitted) $11,000 $3,250 $6,050 $1,980 $550 Current % of Sales 100 29.5 % Change 10 57.5 Average as a % of Sales 100 22.5 59.5 0.83 4.2 Sales Inventory Cost of goods sold Accounts payable Sales commissions Inventory turnover Average number of days to collect Employee turnover Return on investment Debt/Equity 48 8% 14% 14.3% 35% 60% 30 a. Assume that the auditor expects that the client's performance in the current year will be similar to its performance in the prior year. From the preceding data, identify potential risk areas and explain why they represent potential risk. Briefly indicate how the risk analysis should affect the planning of the audit engagement. b. Identify any of the above data that should cause the auditor to increase the level of professional skepticism used on the audit. 7.2010 23 The followin