Analysts Look for Red Flags in Financial Statements That May

question 44

Multiple Choice

Analysts look for red flags in financial statements that may signal financial trouble.Which of the following is a red flag that suggests that a company may be in trouble?

• A) a decline in days' sales in inventory
• B) a decrease in days' sales in receivables from year to year
• C) a reduction in the debt ratio
• D) net cash provided by operating activities is consistently lower than net income

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Definitions:

Nonverbal Communication

Involves the transmission of messages or signals through a non-linguistic means, such as body language, facial expressions, gestures, and posture.

Cross-Cultural

Relating to or involving different cultures, especially regarding comparison, interaction, or exchange.

Tone

The general character or attitude of a place, piece of writing, situation, etc., often setting the mood or atmosphere.

Timing

The selection of the most appropriate or opportune moment to perform an action or make a decision, affecting its success or outcome.