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 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. Explainhowhhe operations of Mahogany Products, Inc., appear to differ from those of the industry.

INDUSTRY AVERAGES MAHOGANY PRODUCTS, INC. RATIO 2001 2000 2001 2000 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 0.08 0.06 0.14 0.12 7. Operating earnings divided by net sales 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