Question: The following are sales, cost of sales,
The following are sales, cost of sales, and inventory data for Aladdin Products Supply Company, a wholesale distributor of cleaning supplies. Dollar amounts are in millions. 
Required a. Calculate the following ratios, using an electronic spreadsheet program (instructor's option): (1) Gross margin as a percentage of sales (2) Inventory turnover b. List several logical causes of the changes in the two ratios. c. Assume that $2,000,000 is considered material for audit planning purposes for 2011. Do any of the fluctuations in the computed ratios indicate a possible material misstatement? Demonstrate this by using the spreadsheet program to perform a sensitivity analysis. d. What should the auditor do to determine the actual cause of the changes?
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2011 2010 2009 2008 Sales Cost of sales Beginning inventory Ending inventory $92.8 $86.8 $78.4 $69.6 68.4 67.2 60.8 54.0 9.2 8.4 7.6 6.0 11.6 9.2 8.4 7.6
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