Which of the following discoveries through the use of analytical procedures would most likely indicate a relatively high risk of financial failure?
A)A decline in gross margin percentages
B)An increase in the balance in fixed assets
C)An increase in the ratio of allowance for uncollectible accounts to gross accounts receivable, while at the same time accounts receivable turnover also decreased
D)A higher than normal ratio of long-term debt to net worth as well as a lower than average ratio of profits to total assets

Question

Quizplus · Accepted Answer

A higher than normal ratio of long-term debt to net worth and a lower than average ratio of profits to total assets indicate financial instability and potential difficulty in meeting financial obligations, suggesting a high risk of financial failure.

Which of the Following Discoveries Through the Use of Analytical