Time: 1 hour, 30 minutes, 53 seconds Question Completion Status: During the audit of a dealership selling only new luxury automobiles, the auditors calculated the year 2nd year Ratios Year 2 Year 1 Explanations (use letters below) ONLY one letter per box 1. Days sales in accounts 32 receivable 20 2. Inventory turnover 4.01 6.32 3. Debt to equity 3.2 4.3 4. Return on 10.5% 12.296 assets Select the most reasonable explanation the controller will provide related to year 2 for each change. Each explanation may be used on, more than once, or not at all. Consider each ratio independently A Due to a more severe than expected economic downtum, buyers Days sales in accounts receivable ys sales in accounts have shifted to economy cars, resulting in higher than expected receivable ending year 2 inventory Inventory turnover B. The company made a required principal payment on ta long term debt. Debt to equity Return on assets C. The company decreased the annual dividend to shareholders D. The board of directors implemented and began a buyback of company stock The company instituted more stringent collection policies. F. Sales managers recorded fraudulent sales at year-end to receive larger commissions E. Save and Submit to save and submit. Click Save All Answers to save all answers. mobook Pro hour, 30 minutes. 48 seconds. uestion Completion Status: Days sales in accounts receivable ys sales in accounts receivable Inventory turnover Debt to equity Return on assets A Due to a more severe than expected economicowtham, buyers have shifted to economy cars, resulting in titan ending year 2 inventory The company made a required principal payment on torm debt. The company decreased the animal dividend to shareholders D. The board of directors implemented and began a buyouck company stock E The comp instituted more stringent collecion policies F. Sales managers recorded fraudulent sales at year-end to larger commissions G. Positive consumer reviews have caused increased sales of cars and a lower year 2 ending inventory as the manufacturing process has been strained by capacity constraints. N 12 ning a sufficient understanding of the entity, its environment and internal control in an audit of the financial statements, assesses so win ann auditina etandarde me all answers