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

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Definitions:

Stockholders

Owners of the stock of the corporation.

Dividends

Payments made by a corporation to its shareholder members, usually distributed from the company's profits.

Liquidation

Occurs when a business is terminated, the assets are sold, and liabilities and partners are paid off.

Creditors

Entities or individuals to whom a company owes money or has financial liabilities, often in the context of short or long-term borrowing.