A] What is an inventors objective in financial statement analysis?

1. To determine if the firm is risky 2. To determine the stability of earnings. 3. To determine changes necessary to improve future performance. 4. To determine whether or not an investment is warranted by estimating a companys future earnings stream.

1. B] Which of the following could lead to cash flow problems?

   1. Obsolete inventory, accounts receivable of inferior quality, easing of credit by suppliers.

   2. Slow-moving inventory, accounts receivable of inferior quality, tightening of credit by suppliers.

   3. Obsolete inventory, increasing notes payable, easing of credit by suppliers.

   4. Obsolete inventory, improved quality of accounts receivable, easing of credit by supplier. C) The direct method of calculating cash flow operations requires the adjustment of net income for deferrals, non-cash, and non-operating expenses True False D) The payment of dividend, common stock and net income can change in retained earnings. True False