DETECTION RISK Definition

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DETECTION RISK is the risk that audit procedures will lead to a conclusion that material error does not exist when in fact such error does exist.

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COVERAGE OF FIXED CHARGES is computed by taking your net income, before taxes and fixed charges (debt repayment, long-term leases, preferred stock dividends etc.), and dividing by the amount of fixed charges. The resulting number shows your ability to meet your fixed obligations of all types i.e. the higher the number, the better.

INVENTORY ACCUMULATION is a buildup of inventory caused primarily by unplanned events, e.g., sales not meeting expectation.

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