Analysts Look for Red Flags in Financial Statements That May

question 114

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 increase 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 as is a major source of cash flows

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Definitions:

Anti-

A prefix meaning “against,” “opposite of,” or “antidote to” (e.g., antibiotic).

Auto-

A prefix meaning self or same, used in various medical and scientific terms to indicate self-origin, such as autoimmune, relating to the immune system attacking the body's own tissues.

Dia-

A prefix in medical terms indicating through, between, apart, or across.

Mal-

A prefix in English meaning "bad" or "wrongly."