During the financial audit of DIGIT.ALL, the Auditor gathered the following relevant financial data on company performance for the past three years.

	2016	2017	2018	2019
sales	P220,500.00	P446,250.00	P803,250.00	P1,204,875.00
Cost of sales	118,125.00	196,875.00	216,562.50	386,564.06
gross margin	-	-	-	-

After analyzing above data, the Auditor was convinced that there are fraud indicators.

Required:

A.1

(a) Perform a horizontal analysis

(b) Identify potential red flags on possible overstatement of sales. Support your answer with reason/justification why you consider this (these) as red flags

A.2

(a) Perform a vertical analysis

(b) Identify potential red flags on possible understatement of cost of sales. Support your answer with reason/justification why you consider this (these) as red flags