The following are sales, cost of sales, and inventory data for Aladdin Products Supply Company, a wholesale
Question:
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Required
a. Calculate the following ratios, using an electronic spreadsheet program (instructor's option):
(1) Gross margin as a percentage of sales
(2) Inventory turnover
b. List several logical causes of the changes in the two ratios.
c. Assume that $2,000,000 is considered material for audit planning purposes for 2011. Do any of the fluctuations in the computed ratios indicate a possible material misstatement? Demonstrate this by using the spreadsheet program to perform a sensitivity analysis.
d. What should the auditor do to determine the actual cause of thechanges?
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a 2011 2010 2009 2008 Gross margin 263 226 224 224 Inventory turnover 66 76 76 79 b Logical causes o...View the full answer
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Related Book For 
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley
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