1. Describe in layman's terms what days sales in receivables means.

2. In the absence of any significant changes described to you by the client, what would your expectation be for fluctuations in this ratio?

3. What was the percentage increase and number of days of the average days sales in receivables ratio?

4. Does the increase in average days sales in receivables warrant more attention, or is the fluctuation reasonable?

5. What was the percentage change in cost of goods sold?

6. What was the percentage change in sales?

7. What was cost of sales as a percentage of sales in the current year versus the prior year?

8. Do these fluctuations appear reasonable?

9. What was the percentage change in each inventory category from the prior year?

10. Would further follow-up be warranted given these changes?

11. What was inventory as a percentage of sales during the prior year as compared to the current year?

12. Would this fluctuation require further audit attention?

13. If you knew this client had a significant increase in inventory from the prior year, what would be your general expectation for accounts payable at current year-end?

14. What was the change in accounts payable?

15. Does this warrant further follow-up?

SalesCostofSalesFinishedGoodsInventory(Approx.250millionft.)CopperRodInventory(Approx.5.5millionIbs.)PlasticsInventory(Approx.1millionIbs.)AccountsPayable(forInv.purchases)DaysPurchasesinA/PDaysSalesinReceivablesMarketPriceofInsulatedWire(perfoot)MarketPriceofCopperRod(perIb.)2018$8,450,000$6,242,500$1,654,500$2,625,000$224,500$450,00043.6days56.3days$0.008$0.480$0.1202017$8,150,000$6,080,000$1,175,500$1,650,000$182,000$425,00044.2days48.4days$0.009$0.480$0.190