Analysts Look for Red Flags in Financial Statements That May

question 166

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 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:

Reinforcement

In psychology, a stimulus or event that follows a behavior and increases the likelihood of that behavior being repeated.

Social Contacts

The interactions and relationships individuals have with others within their social network, including friendships, family ties, and professional associations.

Psychodynamic Assumptions

Fundamental beliefs in psychodynamic theory, emphasizing unconscious psychological processes and the significance of childhood experiences in shaping personality and behavior.

Driving Force

A motivating or primary factor that propels someone or something forward.