Carolina Company computed the following ratios for a two-year period: $\begin{array}{lcc}\text { Ratio }&2013&2014\
1.\text { Current ratio } & 1.3 & .6 \
2.\text { Return on equity } & 25 \% & 16 \% \
3.\text { Quality of income } & 1.7 & .5 \
4.\text { Cash coverage ratio } & 346 & 122 \
5.\text { Profit margin } & 6 \% & 4 \%
\end{array}$ Required:
A. Comment on the trend of each of the ratios from 2013 to 2014. State concerns or possible implications brought to light by each ratio.
B. State an overall opinion of the company's near future with suggestions for improvement.

Question

Carolina Company computed the following ratios for a two-year period: $\begin{array}{lcc}\text { Ratio }&2013&2014\
1.\text { Current ratio } & 1.3 & .6 \
2.\text { Return on equity } & 25 \% & 16 \% \
3.\text { Quality of income } & 1.7 & .5 \
4.\text { Cash coverage ratio } & 346 & 122 \
5.\text { Profit margin } & 6 \% & 4 \%
\end{array}$ Required: 
A. Comment on the trend of each of the ratios from 2013 to 2014. State concerns or possible implications brought to light by each ratio.
B. State an overall opinion of the company's near future with suggestions for improvement.

Quizplus · Accepted Answer

The Answer of Carolina Company computed the following ratios for a two-year period: $\begin{array}{lcc}\text { Ratio }&2013&2014\
1.\text { Current ratio } & 1.3 & .6 \
2.\text { Return on equity } & 25 \% & 16 \% \
3.\text { Quality of income } & 1.7 & .5 \
4.\text { Cash coverage ratio } & 346 & 122 \
5.\text { Profit margin } & 6 \% & 4 \%
\end{array}$ Required: 
A. Comment on the trend of each of the ratios from 2013 to 2014. State concerns or possible implications brought to light by each ratio.
B. State an overall opinion of the company's near future with suggestions for improvement.

Carolina Company Computed the Following Ratios for a Two-Year Period