Red flags in financial statement analysis can include:
A)a slowdown in inventory turnover.
B)sales increasing while receivables decrease.
C)debt ratio higher than average.
D)all of the above.

Question

Quizplus · Accepted Answer

All options (A, B, and C) can be red flags in financial statement analysis. A slowdown in inventory turnover could indicate lower demand for the company's products or poor inventory management. Sales increasing while receivables decrease could indicate overly aggressive revenue recognition or ineffective collection processes. A debt ratio higher than average could indicate the company has taken on too much debt and may not have the resources to pay it off in the future.

Red Flags in Financial Statement Analysis Can Include