Ratio annlysis

Current ratio is always larger than quick ratio, it may because that ancestry is overstated. Inventory turnover ratio has a relatively slight rise , it also sack up be an indicator for the overstated inventory.As per the authorized ratio, overstating inventory allows Santa to avoid booking expenses and reduces the cost of goods sold. It could also auspicate obsolete gestate problems. Ratio Explanation Account Key assertion The change in current ratio compared with the previous year, supports the idea that inventory could be overstated. As a decrease in inventory lead to a decrease in gross margin, the auditor would be concerned that inventory is overstated.Inventory human race Overstating inventory allows Santa to avoid booking an expense now and also rates a larger plus base. By overstating inventory. Management can reduce the cost of good sale. In order to overstate inventory, perplexity may book sales for inventory that does not exist or miscalculate costs . eld in inven tory The increase in days in inventory inventory Existence and paygrade As per the current ratio, overstating allows management to avoid booking expenses and reduces the cost of goods sold, it could also indicate obsolete stock problems.