Question: As part of the analytical procedures of Mahogany Products Inc., you perform calculations of the following ratios. REQUIRED For each of the preceding ratios:a. State

As part of the analytical procedures of Mahogany Products Inc., you perform calculations of the following ratios.

Industry Averages Mahogany Products Inc. Ratio 2018 2017 2018 2017 1. Current

REQUIREDFor each of the preceding ratios:a. State whether there is a need to investigate the results further and, if so, the reason for further investigation.b. State the approach you would use in the investigation.c. Explain how the operations of Mahogany Products Inc. appear to differ from those of the industry.

Industry Averages Mahogany Products Inc. Ratio 2018 2017 2018 2017 1. Current ratio 3.30 3.80 2.20 2.60 2. Days to collect receivables 87.00 93.00 67.00 60.00 3. Days to sell inventory 126.00 121.00 93.00 89.00 4. Purchases divided by accounts payable 11.70 11.60 8.50 8.60 5. Inventory divided by current assets 0.56 0.51 0.49 0.48 6. Operating earnings divided by tangible assets 7. Operating earnings divided by net sales 0.08 0.06 0.14 0.12 0.06 0.06 0.04 0.04 8. Gross margin percentage 0.21 0.27 0.21 0.19 9. Earnings per share $14.27 $13.91 $2.09 $1.93

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a b Ratio number 1 Need for investigation Yes Reason for Investigation Current ratio has decreased from previous year end and is significantly lower than the industry average This could indicate a sho... View full answer

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