8-16 (Analytical procedures) – In audit planning the audit of Circuits Technology, Inc. (CTI). CTI resells, installs, and provides computer networking products (client software, gateway hardware and software, and twinax hardware) to other businesses. Figure 8-14 provides some summary information from CTI’s financial statements.Requireda. Calculate purchases, gross margin, inventory turn days, accounts receivable turn days, and accounts payable turn days for the years ended 20×2, 20×3, 20×4, 20×5.b. Describe the trends identified by performing analytical procedures in the gross operating cycle, the net operating cycle, and gross margin.c. If tolerable misstatement is $45,000 for inventory, develop an expectation range for inventory turn days.d. With respect to inventory, what might these trends indicate about the potential misstatement in inventory?Figure 8-14 ■ CTI Selected Financial Information ($000)20×4
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