Red Flags in Financial Statement Analysis Can Include All of the Following

question 91

Multiple Choice

Red flags in financial statement analysis can include all of the following EXCEPT:

• A) a debt ratio higher than average.
• B) a slowdown in inventory turnover.
• C) sales increasing while receivables decrease.
• D) increase in income from continuing operations.

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Definitions:

Net Income

Represents the amount of money that remains from revenues after all the firm's expenses, taxes, and costs are subtracted over a specific period.

Stockholders' Equity

Stockholders' Equity represents the ownership interest of shareholders in a corporation, calculated as the difference between total assets and total liabilities.

Par Value

The nominal or face value of a bond, share, or coupon as stated by the issuer, often used in the context of bonds and stock.

Legal Expense

Costs incurred by a business related to legal services such as attorney fees, settlements, and court costs, often recognized as part of operating expenses.