As we are aware, financial statements provide critical information about a companys historical financial condition as well as providing insight into the companys future business prospects. Problems do develop and must be addressed by management.

There are some red flags that can provide early warning signs to enable the company to react in a timely fashion. These items do not refer to personnel issues, or necessarily ethical problems, but challenges being faced by the organization.

In this assignment, you will discuss several of these red flags and how to identify them.

Instructions

• Review Chapter 14 in Braun & Tietz textbook.
• Prepare to discuss Red Flags as related to financial information. Ensure the following points are addressed.
  • Explain what Red Flags are and why they matter.
  • Describe six examples of Red Flags that any analyst of financial statements must look for.
  • Explain why each is critical to financial statement analysis