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

question 28

Essay

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.

Explain the impact of accounting adjustments on financial statements.

Comprehend how accrual accounting enhances the usefulness of financial statements.

Identify and explain different types of adjusting entries and their purposes.

Calculate key financial ratios and analyze financial data.

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Definitions:

Identifiers

Names used in programming languages to identify variables, functions, classes, modules, and other user-defined elements.

Driver Function

A function specifically designed to initiate and control the flow of execution in a program, often setting up initial states and invoking other functions.

Function Header Line

A line at the beginning of a function definition that includes the function name, return type, and parameters.

Passing Data

The process of transferring data between different parts of a computer program or between different programs themselves.