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