1. A company's balance sheet shows a significant increase in inventory levels. What could be the potential implications for the financial analyst? A) Improved efficiency in inventory management. B) Potential overstocking and liquidity issues. C) Indication of increased sales volume. D) None of the above. Answer: B) Potential overstocking and liquidity issues. Rationale: A significant increase in inventory could indicate that the company is not selling its product as quickly as expected, which may lead to liquidity problems if the trend continues. 2. When analyzing a company's cash flow statement, an analyst notices a consistent pattern of negative cash flow from operations. What does this suggest? A) The company is efficiently managing its operational costs. B) The company is investing heavily in long-term assets. C) The company may be struggling to generate enough revenue to