Which of the following would NOT be a red flag in a financial statement analysis?
A)Increased Accounts Receivable turnover
B)Decreased cash flow
C)High debt ratio
D)Low inventory turnover

Question

Quizplus · Accepted Answer

Increased accounts receivable turnover is typically a positive sign as it indicates that the company is collecting its receivables faster, which can improve cash flow and reduce the risk of bad debts. The other options are red flags as they can indicate potential financial issues, such as reduced liquidity (decreased cash flow), excessive debt (high debt ratio), and slow-moving inventory (low inventory turnover).

Which of the Following Would NOT Be a Red Flag