"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:

Normal Saline

A solution of 0.9% sodium chloride (salt) in water, mirroring the salt concentration in blood and tissues, commonly used for intravenous hydration.

Acid PH

A measure of acidity or alkalinity, where a pH less than 7 indicates an acidic substance.

Sensory Organ

An organ of the body responsible for receiving and processing sensory information, such as the eyes, ears, skin, nose, and tongue.

Sutures

Threads or stitches used by surgeons to close cuts or wounds in the skin or tissues, promoting healing and minimizing infection risk.