Which of the Following Is a "Red Flag" Suggesting That

question 158

Multiple Choice

Which of the following is a "red flag" suggesting that a company may be in trouble?

• A) A decline in days in inventory
• B) An increase in dividend payout
• C) A reduction in inventories
• D) Cash flow from operations lower than net income

---

Definitions:

Monthly Sales

The total revenue generated from sales within a month, often tracked to assess business performance.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor expenses.

Sales Commissions

Fees paid to salespersons or agents based on the value or volume of sales achieved, typically expressed as a percentage.

Fixed Selling Expenses

Costs associated with selling a product or service that do not change with the level of production or sales, such as salaries of sales personnel and rent of the sales office.