medium · Principles of Finance financial-statements-markets-wc
An analyst notices that a company's Net Income is significantly higher than its Cash Flow from Operations (CFO) for three consecutive years.
Which 'Red Flag' is most likely being signaled?
- The firm is repaying its outstanding debt too aggressively.
- Aggressive revenue recognition or potential earnings management.
- The firm is subject to an unusually high effective tax rate.
- The firm is going through a stretch of unusually heavy capital spending.
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