CASE: DARLANA FURNITURE

1) What financial problems is Darlarna currently facing in the areas of liquidity, asset management, long-term debt-paying ability, and profitability? What are their causes? Focus on the ratios in the attached worksheet and understand what these numbers mean in terms of the company's financial health. Do not forget the bank covenants as they are important to determine whether or not the bank will recall the line of credit.

2) What actions should Darlarna take to prevent bankruptcy?

Use key case facts in your answers to the above questions.