You have performed preliminary analytical procedures on one of your audit engagements and observed the following independentsituations:

1.

The allowance for obsolete inventory increased from the prioryear, but the allowance as a percentage of inventory decreased from the prior year.

2.

Long-term debt increased from the prioryear, but total interest expense decreased as a percentage oflong-term debt.

3.

The dollar amount of operating income is consistent with the prior year although the entity was more profitable on a net income basis.

4.

The quick ratio decreased from the prioryear, although the amount of cash and net accounts receivable is almost the same as the prior year.

Below are possible explanations for each of the observed changes in the financial statement amounts and ratios. For each observedchange, select the most likelyexplanation(s) from the list below.Note: There may be more than one explanation for a given observedchange, and an explanation can be used more than once.