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ALADDIN PRODUCTS SUPPLY COMPANY
RATIO CALCULATIONS
Part a. DATA ENTRY AREA: 2016 2015 2014 2013
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
Ending inventory 11,600,000 9,200,000 8,400,000 7,600,000
RESULTS AREA: 2016 2015 2014 2013
Gross margin/Sales 26.3% 22.6% 22.4% 22.4%
Inventory Turnover 6.6 7.6 7.6 7.9
Part c. FLUCTUATION ANALYSIS
Increase in gross margin
from 2015 to 2016:
3.7%
x 2016 Sales 92,800,000
= Potential misstatement 3,433,600
2016 Cost of Sales 68,400,000
Divided by 2015 inventory turnover 7.6
= Expected inventory 9,000,000
- 2016 Ending inventory 11,600,000
= Potential misstatement 2,600,000
Both potential misstatements are greater than $2,000,000
