Answer (D) is correct . Mere stagnation of cash flows does not indicate potential insolvency. Flow-based insolvency occurs when cash flows are inadequate, not when they are simply not growing at the desired rate.
Answer (A) is incorrect because Negative earnings are an early signal of potential insolvency.
Answer (B) is incorrect because Layoffs are an early signal of potential insolvency.
Answer (C) is incorrect because A declining share price is an early signal of potential insolvency.
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