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 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