1) Calculate the (Average Days Sales Outstanding Ratio) for 20XX(CY) & 20XX-1(PY) years and analyze any trends, are they positive, negative, or neutral changes)? See the DSO Ratio tab for more details about the ratio to use to help you analyze the change in the ratio. USE THE TABLE BELOW TO ANSWER ii) Calculate the (Gross Profit Ratio) for 20x8 & 20x7 years and analyze any trends, (are they positive, negative, ar neutral changes)? USE THE TABLE BELOW TO ANSWER Q3 23. *) Use 5% as a threshold to determine if the change warrants investigation. (5% is based on historical volatility in the data, auditor judgement, and the fact this is a planning analytic that requires a low level of precision.) (Assume all sales are credit sales.) - (Assume Account Receivables for the past 5 years were as follows) 20XX-2 (2 yrs 20XX-3 (3 yrs 20XX (CY) 20XX-4 20XX-1 (PY) ago) ago) I4yrs ago) Accounts Receivable $ 51,719 $ 40,741 $ 31,000 $ 23,500 $ 17,000 |- (Assume Revenuess for the past 5 years were as follows) 20XX-2 (2 yrs 20XX-3 (3yrs 20XX-4 20XX (CY) 20XX-1 (PY) ago) ago) (4yrs ago) Device Sale Income (Net of $ 103,175$ 85,540 $ 65,500 $ 49,500 $ 36,000 Sales Returns and Discounts) Cast of Good Sold $ 51,833$ 42,770 Gross Profit $ 51,342 $ 42,770 USE THE TABLE BELOW TO ANSWER ii) Calculate the Account Receivable / Revenue Ratio (Accounts Receivable divided by /Revenue) for 20X4-20X8. Do you see any unusual trends? (Briefly explain) (EX: No unusual trend. A lot of fluctuation, No fluctuation.) USE THE TABLE BELOW TO ANSWER 3i. Ratio Analysis-DSO Ratio Ratio 20xx (CY) 20XX-1 (PY) Difference Explanation Analysis a. Ex: The Change is within the threshold of 5%, more than 5%, or less than 5%. (Answer based on what you calculate in Column H.) b. EX: The DSO Ratio improved / got worse this means that customers are taking moreless days to pay back the company. This represents #VALUE! more risk/less risk for the auditor to audit Acct Receivables. (EX: SXX) 239.98 Average Days Sales Outstanding Ratio (aka DSO Ratio)= (365 Average accounts receivable/Sales 3ii. Ratio Analysis-Gross Profit Ratio Ratio 20XX (CY) 20XX-1 (PY) Difference Explanation Analysis a EX: The Change is within the threshold of 5%, more than 5%, or less than 5%. (Answer based on what you calculate in Column H.) b. EX: The DSO Ratio improved / got worse this means that customers are taking more less days to pay back the company. This represents more risk/less risk for the auditor to audit Acct Receivables. ANSWER: Grass profit ratio=Gross profit/Net sales (EX: SXX) 50% #VALUE! 3iii. Trend Analysis for past 5 years. Difference. PY to CY 20XX (CY) 20XX-1 (PY) 20XX-2 (2 yrs 20XX-3 (3 yrs 20XX-4 Explanation Analysis ago) ago) Ayrs ago) Device Sale Income (Net of Sales Returns and $ 103,175 $ 85,540S 85,500 $ 49,500 $ 36,000 Discounts) Accounts Receivable S 51,719 $ 40.741 S 31,000 $ 23,500 $ 17,000 a. We are auditing 20XX(CY) so see if the ratio changed by more than 5% (threshold per above) from 20XX-1/PY (Answer based on what you calculate in Column H) Acct Recl Revenue Ratio b. (HINT: Also look for what the ratio has been historically, see if the ratio is increasing, decreasing or staying the same (1-2) changes are not abnormal) See if 20XX(CY) sticks out as unusual compared to the (EX: CY minus PY) (EX: XX) EX:XX36) (EX:XX36) (EX: XXX) 47% previous 4-5 years) 1) Calculate the (Average Days Sales Outstanding Ratio) for 20XX(CY) & 20XX-1(PY) years and analyze any trends, are they positive, negative, or neutral changes)? See the DSO Ratio tab for more details about the ratio to use to help you analyze the change in the ratio. USE THE TABLE BELOW TO ANSWER ii) Calculate the (Gross Profit Ratio) for 20x8 & 20x7 years and analyze any trends, (are they positive, negative, ar neutral changes)? USE THE TABLE BELOW TO ANSWER Q3 23. *) Use 5% as a threshold to determine if the change warrants investigation. (5% is based on historical volatility in the data, auditor judgement, and the fact this is a planning analytic that requires a low level of precision.) (Assume all sales are credit sales.) - (Assume Account Receivables for the past 5 years were as follows) 20XX-2 (2 yrs 20XX-3 (3 yrs 20XX (CY) 20XX-4 20XX-1 (PY) ago) ago) I4yrs ago) Accounts Receivable $ 51,719 $ 40,741 $ 31,000 $ 23,500 $ 17,000 |- (Assume Revenuess for the past 5 years were as follows) 20XX-2 (2 yrs 20XX-3 (3yrs 20XX-4 20XX (CY) 20XX-1 (PY) ago) ago) (4yrs ago) Device Sale Income (Net of $ 103,175$ 85,540 $ 65,500 $ 49,500 $ 36,000 Sales Returns and Discounts) Cast of Good Sold $ 51,833$ 42,770 Gross Profit $ 51,342 $ 42,770 USE THE TABLE BELOW TO ANSWER ii) Calculate the Account Receivable / Revenue Ratio (Accounts Receivable divided by /Revenue) for 20X4-20X8. Do you see any unusual trends? (Briefly explain) (EX: No unusual trend. A lot of fluctuation, No fluctuation.) USE THE TABLE BELOW TO ANSWER 3i. Ratio Analysis-DSO Ratio Ratio 20xx (CY) 20XX-1 (PY) Difference Explanation Analysis a. Ex: The Change is within the threshold of 5%, more than 5%, or less than 5%. (Answer based on what you calculate in Column H.) b. EX: The DSO Ratio improved / got worse this means that customers are taking moreless days to pay back the company. This represents #VALUE! more risk/less risk for the auditor to audit Acct Receivables. (EX: SXX) 239.98 Average Days Sales Outstanding Ratio (aka DSO Ratio)= (365 Average accounts receivable/Sales 3ii. Ratio Analysis-Gross Profit Ratio Ratio 20XX (CY) 20XX-1 (PY) Difference Explanation Analysis a EX: The Change is within the threshold of 5%, more than 5%, or less than 5%. (Answer based on what you calculate in Column H.) b. EX: The DSO Ratio improved / got worse this means that customers are taking more less days to pay back the company. This represents more risk/less risk for the auditor to audit Acct Receivables. ANSWER: Grass profit ratio=Gross profit/Net sales (EX: SXX) 50% #VALUE! 3iii. Trend Analysis for past 5 years. Difference. PY to CY 20XX (CY) 20XX-1 (PY) 20XX-2 (2 yrs 20XX-3 (3 yrs 20XX-4 Explanation Analysis ago) ago) Ayrs ago) Device Sale Income (Net of Sales Returns and $ 103,175 $ 85,540S 85,500 $ 49,500 $ 36,000 Discounts) Accounts Receivable S 51,719 $ 40.741 S 31,000 $ 23,500 $ 17,000 a. We are auditing 20XX(CY) so see if the ratio changed by more than 5% (threshold per above) from 20XX-1/PY (Answer based on what you calculate in Column H) Acct Recl Revenue Ratio b. (HINT: Also look for what the ratio has been historically, see if the ratio is increasing, decreasing or staying the same (1-2) changes are not abnormal) See if 20XX(CY) sticks out as unusual compared to the (EX: CY minus PY) (EX: XX) EX:XX36) (EX:XX36) (EX: XXX) 47% previous 4-5 years)