Carolina Company computed the following ratios for a two year period:
$$\begin{array} { l l c c }
& \underline { \text { Ratio } } & \underline { 2009 } & \underline { 2010 } \
\text { A. } & \text { Current ratio } & 1.3 \text { to } 1 & .6 \text { to } 1 \
\text { B. } & \text { Return on equity } & 25 \% & 16 \% \
\text { C. } & \text { Quality of income } & 1.7 & .5 \
\text { D. } & \text { Cash coverage ratio } & 346& 122 \
\text { E. } & \text { Profit margin } &6 \% & 4 \%
\end{array}$$ Required:
Comment on the trend of each of the ratios from 2009 to 2010.State concerns or possible implications for the future of each.

Question

Carolina Company computed the following ratios for a two year period:
 $$\begin{array} { l l c c } 
& \underline { \text { Ratio } } & \underline { 2009 } & \underline { 2010 } \
\text { A. } & \text { Current ratio } & 1.3 \text { to } 1 & .6 \text { to } 1 \
\text { B. } & \text { Return on equity } & 25 \% & 16 \% \
\text { C. } & \text { Quality of income } & 1.7 & .5 \
\text { D. } & \text { Cash coverage ratio } &  346& 122 \
\text { E. } & \text { Profit margin } &6 \% & 4 \%
\end{array}$$ Required:
Comment on the trend of each of the ratios from 2009 to 2010.State concerns or possible implications for the future of each.

Quizplus · Accepted Answer

The Answer of Carolina Company computed the following ratios for a two year period:
 $$\begin{array} { l l c c } 
& \underline { \text { Ratio } } & \underline { 2009 } & \underline { 2010 } \
\text { A. } & \text { Current ratio } & 1.3 \text { to } 1 & .6 \text { to } 1 \
\text { B. } & \text { Return on equity } & 25 \% & 16 \% \
\text { C. } & \text { Quality of income } & 1.7 & .5 \
\text { D. } & \text { Cash coverage ratio } &  346& 122 \
\text { E. } & \text { Profit margin } &6 \% & 4 \%
\end{array}$$ Required:
Comment on the trend of each of the ratios from 2009 to 2010.State concerns or possible implications for the future of each.

Carolina Company Computed the Following Ratios for a Two Year