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

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Definitions:

Location Convenient

A criterion describing a place or venue that is easily accessible and practical for users or customers, often considered in business site selection.

Customers

Individuals or entities that purchase goods or services from a business.

Purchase

The act of buying goods or services, acquiring property or items in exchange for money.

Place Utility

Refers to the increased value that is added to goods by having them available at a location where they are wanted by consumers.