MAA303 Audit And Assurance - Chapter 4: Risk Assessment II

4.29  Analytical procedures

Blue Ltd is in the computer sales business. Blue’s auditor has conducted an analysis of the unaudited figures in preparation for setting the audit strategy. The calculations reveal that inventories turnover is lower this year than last, even more than the auditor expected given the additional competition in Blue’s main markets.

Required
Explain how the turnover ratio analysis would affect the audit strategy for Blue.