As part of the analytical procedures of Mahogany Products, Inc., you calculate the following ratios:

$$Ratio

$20$X$8$

$20$X$7$

$20$X$8$

$20$X$7$

$1.$Current ratio

$3\mathrm{.}30$

$3\mathrm{.}80$

$2\mathrm{.}20$

$2\mathrm{.}60$

$2.$Days to collect receivables

$87\mathrm{.}00$

$93\mathrm{.}00$

$67\mathrm{.}00$

$60\mathrm{.}00$

$3.$Days to sell inventory

$126\mathrm{.}00$

$121\mathrm{.}00$

$93\mathrm{.}00$

$89\mathrm{.}00$

$4.$Purchases divided by accounts

payable

$11\mathrm{.}70$

$11\mathrm{.}60$

$8\mathrm{.}50$

$8\mathrm{.}60$

$5.$Inventory divided by current

assets

$0\mathrm{.}56$

$0\mathrm{.}51$

$0\mathrm{.}49$

$0\mathrm{.}48$

$6.$Operating earnings divided by

tangible assets

$0\mathrm{.}08$

$0\mathrm{.}06$

$0\mathrm{.}14$

$0\mathrm{.}12$

$7.$Operating earnings divided by

net sales

$0\mathrm{.}06$

$0\mathrm{.}06$

$0\mathrm{.}04$

$0\mathrm{.}04$

$8.$Gross margin percentage

$0\mathrm{.}21$

$0\mathrm{.}27$

$0\mathrm{.}21$

$0\mathrm{.}19$

$9.$Earnings per share

$$14\mathrm{.}27$

$$13\mathrm{.}91$

$$2\mathrm{.}09$

$$1\mathrm{.}93$

$$

Required

For each of the preceding ratios:

State whether there is a need to investigate the results further and, if so$,$ the reason for further investigation. $(22$ Marks$)$

State the approach you would use in the investigation. $(13$ Marks$)$

Explain how the operations of Mahogany Products, Inc. appear to differ from those of the industry. Describe how this difference would affect your risk assessments. $(6$ Marks$)$