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:

Cognitive Theories

Theories in psychology that explain human behavior and mental processes through the study of how people think, perceive, remember, and learn.

Behavioral Theorist

A scholar or researcher who studies and explains human behavior through various theories and models, focusing on observable behavior and its triggers.

Conditioning

According to behaviorism, the processes of learning. The word conditioning emphasizes the importance of repeated experiences, as when an athlete conditions his or her body by training day after day.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention until it is associated with an unconditioned stimulus.