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Financial Reporting & Analysis
Financial Reporting & Analysis
Medium
An analyst notices that Prism Technologies reports increasing net income but declining operating cash flow over three consecutive years, while days sales outstanding (DSO) has risen from 45 to 72 days. These observations are most consistent with:
A
Aggressive revenue recognition practices that may indicate earnings manipulation
B
A rapidly growing business that requires significant working capital investment
C
A shift from accrual to cash-basis accounting under management discretion
D
Improved operational efficiency leading to higher profit margins
Select an answer to continue
Tags
#earnings-manipulation
#red-flags
#dso
#cash-flow-divergence
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