Analysts Look for Red Flags in Financial Statements That May

question 166

Multiple Choice

Analysts look for red flags in financial statements that may signal financial trouble.Which of the following is a red flag that suggests that a company may be in trouble?

• A)a decline in days' sales in inventory
• B)a decrease in dividend payout ratio from year to year
• C)a reduction in the debt ratio
• D)net cash flow from operating activities is consistently lower than net income

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Definitions:

Stimulus Discrimination

Stimulus Discrimination is the ability to differentiate between one stimulus and another, especially in the context of learning and behavior.

Spontaneous Recovery

The phenomenon where a learned behavior resurfaces after a period of non-exposure to the associated stimulus, demonstrating the persistence of memory over time.

Pavlov

Refers to Ivan Pavlov, a Russian physiologist known for his work in classical conditioning, particularly using bells to induce salivation in dogs.

Spontaneous Recovery

Describes the sudden reappearance of a previously extinguished response after a period of no exposure to the conditioned stimulus.