Analytical proceduresThe following information was taken from the accounting records for Aurora Manufacturing, Inc.:

Year 5 Year 4 Year 3 Year 2 Year 1

Unaudited Audited Audited Audited Audited

Inventory $ 525,000 $ 460,000 $ 390,000 $ 310,000 $ 225,000

Current assets 1,350,000 1,175,000 950,000 750,000 600,000

Accounts payable 115,000 113,000 97,500 85,000 70,000

Current liabilities 545,000 535,000 440,000 380,000 320,000

Sales 2,700,000 2,050,000 1,750,000 1,400,000 1,200,000

Cost of goods sold 1,650,000 1,225,000 1,025,000 850,000 725,000

Industry Median

Accounts payable turnover days 31 30 29 30

Cost of goods sold to average accounts payable 10.7 11.2 10.9 11.1

Current ratio 1.9 2.2 2.3 2.1

Required

1. Calculate the following information and ratios for years 2, 3, 4, and 5:
2. Purchases.
3. Accounts payable turnover in days.
4. Cost of goods sold to average accounts payable.
5. Current ratio.
6. Describe the implications of the resulting ratios for the audit strategy in year 5. What specific audit objectives are likely to be misstated? How should the auditor respond in terms of potential audit procedures?