11-49 LO 4,5,6 Refer to Exhibit 11.6 and access the three most recent SEC filings (10K) for three companies in the same industry. a. Calculate the following ratios from Exhibit 11.6 for each of the companies: Gross margin % Inventory turnover Days' sales in inventory Accounts payable/current liabilities Compare and contrast your results across companies, and note any areas of audit attention that are evident. Summarize management's disclosures about internal control for each company for the most recent fiscal year. Comment on audit implications, including the relative proportion of evidence that you would gather from tests of details, substantive analytics, and tests of controls. Exhibit 11.6 na Ratios and Trends Analyses in Planning Analytical edures in the Acquisition and Payment Cycle Inventory Ratios . Gross margin analysis Inventory turnover (cost of goods sold/ending inventory) Number of days' sales in inventory (365/inventory turnover) Shrinkage ratio (inventory write-down/ending inventory) Inventory per square foot of retail space (for retail clients; and comparisons should be made across locations in stores of comparable size and product mix to test for unexpected differences) Inventory overhead application. Analyze the relationship between materials, labor, and overhead to total product costing: compare over time and across product categories. Consider trends in the above ratios. Accounts Payable Ratios Accounts payable turnover (purchases/average accounts payable) * Days outstanding in accounts payable (365/accounts payable turnover) Accounts payable/current liabilities Purchase returns and allowances/purchases . Consider trends in the above ratios 11-49 LO 4,5,6 Refer to Exhibit 11.6 and access the three most recent SEC filings (10K) for three companies in the same industry. a. Calculate the following ratios from Exhibit 11.6 for each of the companies: Gross margin % Inventory turnover Days' sales in inventory Accounts payable/current liabilities Compare and contrast your results across companies, and note any areas of audit attention that are evident. Summarize management's disclosures about internal control for each company for the most recent fiscal year. Comment on audit implications, including the relative proportion of evidence that you would gather from tests of details, substantive analytics, and tests of controls. Exhibit 11.6 na Ratios and Trends Analyses in Planning Analytical edures in the Acquisition and Payment Cycle Inventory Ratios . Gross margin analysis Inventory turnover (cost of goods sold/ending inventory) Number of days' sales in inventory (365/inventory turnover) Shrinkage ratio (inventory write-down/ending inventory) Inventory per square foot of retail space (for retail clients; and comparisons should be made across locations in stores of comparable size and product mix to test for unexpected differences) Inventory overhead application. Analyze the relationship between materials, labor, and overhead to total product costing: compare over time and across product categories. Consider trends in the above ratios. Accounts Payable Ratios Accounts payable turnover (purchases/average accounts payable) * Days outstanding in accounts payable (365/accounts payable turnover) Accounts payable/current liabilities Purchase returns and allowances/purchases . Consider trends in the above ratios