Pro-Tex Company is a wholesale distributor of professional equipment and supplies. The company's sales have averaged about \($900,000\) annually for the three-year period 19X3-19X5. The firm's total assets at the end of 19X5 amounted to \($850,000.\) Pro-Tex is a new audit client. At your request, the controller and his staff accumulate the following ratios for the three-year period ending December 31, 19X5:

Required

a. Identify any unusual relationships in individual ratios that you believe may have audit significance for your 19X6 audit.

b. From the data, identify significant trends in the company's financial position and operating results.

c. Identify any unusual fluctuations in the trend results that you believe may have audit significance for your 19X6 audit.

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19X3 19X4 19X5 Current ratio Acid-test (quick) ratio Accounts receivable turnover 1.80 1.92 1.96 1.08 0.99 0.87 8.75 7.71 6.42 Inventory turnover 4.73 4.32 3.42 Percent of total debt to total assets 48.0 45.0 42.0 Percent of long-term debt to total assets 28.0 24.0 21.0 Sales to fixed assets (fixed asset turnover) 1.58 1.69 1.79 Sales as a percent of 19X1 sales 1.00 1.03 1.05 Gross margin percentage 36.0 34.7 34.6 Net income to sales (%) 7.0 7.0 7.2 Return on total assets (%) 7.7 7.7 7.8 Return on stockholders' equity (%) 13.6 13.1 12.7