"Analysts Look for Red Flags in Financial Statements That May

Multiple Choice

"Analysts look for red flags in financial statements that may signal financial trouble." Which of the following is a "red flag" suggesting 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