The following are sales, cost of sales, and inventory data for Garbage Products Supply Company, a wholesale distributor of cleaning supplies.

	2021	2020	2019	2018
Sales	92,800,000	86,800,000	78,400,000	69,600,000
Cost of sales	68,400,000	67,200,000	60,800,000	54,000,000
Beginning inventory	9,200,000	8,400,000	7,600,000	6,000,000
Beginning inventory	11,600,000	9,200,000	8,400,000	7,600,000

Required: 1) Calculate the following ratios: a) Gross margin as a percentage of sales b) Inventory turnover 2) List several logical causes of the change in the two ratios. 3) Assume that P2,000,000 is considered material for audit planning purposes for 2021. Do any of the fluctuations in the computed ratios indicate a possible material misstatement? 4) What should the auditor do to determine the actual cause of the change? show solution