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Your client maintains separate systems for inventory purchases, PUR, and for additions to physical inventory, IADD. The formulations of activities in the two cycles that the above represent are: APe=APb +PUR -CD le=lb +IADD-COS APb and APb are Accounts Payable at end and beginning of year PUR are inventory purchases during the year CD is cash disbursements during the year le and lb are physical inventory amounts at end and beginning fo year IADD is additions to physical inventory (that is, the debits to Inventory for inventory that has be received) COS is cost of sales for the year (that is, the credits to Inventory for inventory that has been sold and shipped) Under usual business conditions, PUR tends to be > CD Suppose you have the following indicators on selected ratios: PUR/APe K PUR/IADD PUR/CD What misstatement could explain the observed indicators