Identify Four Nonquantitative Signals That Would Indicate the Possibility of Trouble

question 32

Essay

Identify four nonquantitative signals that would indicate the possibility of trouble.

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Definitions:

Times Interest Earned

A financial metric that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes (EBIT).

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency.

Total Current Assets

The sum of all assets a company expects to convert into cash within one year, including cash, accounts receivable, and inventory.

Total Current Liabilities

The sum of all liabilities of a company that are expected to be settled within one fiscal year or an operating cycle, whichever is longer.