• Step 1: Identify Suitable Analytical Procedures. Your audit senior has suggested that the following ratios (on an overall financial statement level) will be used for planning analytical procedures in the acquisition and payment cycle at PharmaCorp:

Inventory Ratios

• Gross margin analysis (revenues-cost of sales)/revenues
• Changes in cost of goods sold on a percentage basis, yearly comparisons
• Inventory turnover (cost of goods sold/ending inventory)
• Number of days' sales in inventory (365/inventory turnover)

Accounts Payable Ratios

• Accounts payable turnover (purchases/average accounts payable)
• Days outstanding in accounts payable (365/accounts payable turnover)
• Accounts payable/current liabilities

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