"Analysts Look for Red Flags in Financial Statements That May

question 27

Multiple Choice

"Analysts look for red flags in financial statements that may signal financial trouble." Which of the following is a "red flag" suggesting 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:

Radical

A term often used to describe individuals, groups, or ideas that advocate for thorough or complete political or social reform.

American Politics

The political activities, policies, and structure within the United States, including government operation and election processes.

Impact

The strong effect or influence that one thing has on another, often used in contexts ranging from social and environmental to economic.