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One step in assessing the quality of earnings is to look for red flags. An example of a red flag is a significant decrease in
One step in assessing the quality of earnings is to look for red flags. An example of a red flag is a significant decrease in inventory turnover, which is calculated from financial statements. This may indicate obsolete or unsaleable goods. List five other red flags the astute analyst might look for, describe why it is a red flag, and identify where the analyst might find this information.
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