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

question 21

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 buildup of inventories
• D) Cash flow from operations is higher than net income

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Definitions:

Public Policy

A course of action or inaction chosen by public authorities to address a given problem or interrelated set of problems.

Illegal Terms

Provisions in a contract or agreement that are not lawful or that violate legal statutes.

Pass-through Entity

A business structure where the entity itself pays no taxes on the business income, but this income is passed through to the individual owners, who pay personal income tax on it.

Taxpaying Entity

An individual, a company, or an organization that is legally obligated to pay taxes to a governmental authority.