i) Calculate the (Average Days Sales Outstanding Ratio) for 20x8 & 20x7 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 20XX & 20XX-1 years and analyze any trends, (are they positive, negative, or neutral changes)? USE THE TABLE BELOW TO ANSWER Q3. ii) 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 20XX-1 120XX-2 20XX-3 20XX-4 Accounts Receivable 4,500 3,500 3,250 $ 3,100 $ 2,700 (Assume Revenuess for the past 5 years were as follows) 20xx 20XX-1 20XX-2 20XX-3 20XX-4 Inventory Sales(Net of Sales Returns and Discounts) 12,000 10,000 9,000 8,500 $ 7,900 Cost of Good Sold 11,300 9,450 Gross Profit $ 700$ 550 USE THE TABLE BELOW TO ANSWER iii) 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 20XX-1 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. Average Days Sales Outstanding Ratio (aka DSO Ratio)= (365 * Average accounts receivable)/ Sales (EX: $XX) 187.06 3ii. Ratio Analysis-Gross Profit Ratio Ratio 20XX 20XX-1 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. NSWER: Gross profit ratio=Gross profit/Net sales (EX: $XX) 6% 20XX 20XX-1 20XX-2 20XX-3 20XX-4 Explanation/Analysis 3iii. Trend Analysis for past 5 years. Difference-20XX-1 to 20XX Inventory Sales(Net of Sales Returns and Discounts) Accounts Receivable S 12,000 $10,000 $ 9,000 $ 8.500 5 7,900 S S 4,500 $ 3,500 $ 3,250 $ 3,100 S 2,700 Acct Rec/ Revenue Ratio a. We are auditing 20x8 so see if the ratio changed by more than 5% (threshold per above) from 20x7. (Answer based on what you calculate in Column H.) 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 20x8 sticks out as unusual compared to the previous 4-5 years) 34% (EX: XX%) (EX: XX%) (EX: 20XX-20XX-1) (EX: XX%) (EX: XX%) The Assumption here is that the account receivables primarily arise from Inventory sales. i) Calculate the (Average Days Sales Outstanding Ratio) for 20x8 & 20x7 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 20XX & 20XX-1 years and analyze any trends, (are they positive, negative, or neutral changes)? USE THE TABLE BELOW TO ANSWER Q3. ii) 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 20XX-1 120XX-2 20XX-3 20XX-4 Accounts Receivable 4,500 3,500 3,250 $ 3,100 $ 2,700 (Assume Revenuess for the past 5 years were as follows) 20xx 20XX-1 20XX-2 20XX-3 20XX-4 Inventory Sales(Net of Sales Returns and Discounts) 12,000 10,000 9,000 8,500 $ 7,900 Cost of Good Sold 11,300 9,450 Gross Profit $ 700$ 550 USE THE TABLE BELOW TO ANSWER iii) 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 20XX-1 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. Average Days Sales Outstanding Ratio (aka DSO Ratio)= (365 * Average accounts receivable)/ Sales (EX: $XX) 187.06 3ii. Ratio Analysis-Gross Profit Ratio Ratio 20XX 20XX-1 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. NSWER: Gross profit ratio=Gross profit/Net sales (EX: $XX) 6% 20XX 20XX-1 20XX-2 20XX-3 20XX-4 Explanation/Analysis 3iii. Trend Analysis for past 5 years. Difference-20XX-1 to 20XX Inventory Sales(Net of Sales Returns and Discounts) Accounts Receivable S 12,000 $10,000 $ 9,000 $ 8.500 5 7,900 S S 4,500 $ 3,500 $ 3,250 $ 3,100 S 2,700 Acct Rec/ Revenue Ratio a. We are auditing 20x8 so see if the ratio changed by more than 5% (threshold per above) from 20x7. (Answer based on what you calculate in Column H.) 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 20x8 sticks out as unusual compared to the previous 4-5 years) 34% (EX: XX%) (EX: XX%) (EX: 20XX-20XX-1) (EX: XX%) (EX: XX%) The Assumption here is that the account receivables primarily arise from Inventory sales