Which of the following is a 'red flag' suggesting that a company may be in trouble?
A)A reduction in the debt ratio
B)A decrease in inventory levels
C)Inconsistent movements among sales,inventory and receivables
D)Cash flow from operations is higher than profit

Question

Quizplus · Accepted Answer

Inconsistent movements among sales, inventory, and receivables could suggest that a company is having trouble managing its operations efficiently, which could lead to cash flow problems and potentially impact the company's financial health in the long-term. A reduction in debt ratio and cash flow from operations being higher than profit could actually be positive signs for a company, while a decrease in inventory levels could be a result of successful inventory management.

Which of the Following Is a 'Red Flag' Suggesting That