In connection with your overall review of operations of Medina Company, you are presented with a summary of certain data prepared by a staff accountant comparing Medina with industry averages as follows:

1. Explain the difference between earnings per share of Medina Company and that of the industry as a whole.

2. List one inconsistency between Medina and its industry you would want to investigate. Briefly explain why.

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Medina Co. Industry average Current ratio Net income to net sales Net income to owner's equity Acid test ratio 2.1 to 1 8% 1.97 to 1 4.2% 2% Inventory turnover Receivables turnover Earnings per share Cost of goods sold to net sales Sales returns and allowances to net sales Book value per share 4% 1.3 to 1 1.1 to 1 5 2.5 11 13 $2.13 $0.14 71% 80% 7% 1% $53.25 $7.00