Solution-Which steps in the accounting analysis might raise

Which steps in the accounting analysis might raise red flag

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Reference no: EM132943845

Jing has looked at some statistics on the causes of company failure. The top six reasons are:

i inadequate cash flow (18.8%)

ii poor strategic management (18.3%)

iii trading losses (14.3%)

iv poor financial control, including record keeping (14.2%)

v under-capitalisation (8.1%)

vi poor economic conditions (5.9%).

Problem a. For each of these causes of failure, which steps in the accounting analysis, if any, might 'raise a red flag' or give you forewarning?

Problem b. Jing states: 'As inadequate cash flow is the major causes of company failure, there is no need to look at earnings'. Do you agree? Why or why not?

Reference no: EM132943845

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Which steps in the accounting analysis might raise red flag

Reference no: EM132943845

Reference no: EM132943845

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