Analysts Look for Red Flags in Financial Statements That May

question 144

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 significant decrease in net income for several years in a row
• B) a consistent movement in sales, merchandise inventory, and accounts receivable
• C) a reduction in the debt ratio
• D) operating activities are a major source of cash flows

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