The quality of income ratio can only be interpreted based on knowledge of a company's business operations and strategies.

Question

Quizplus · Accepted Answer

The quality of income ratio looks at the proportion of cash flow from operating activities that comes from core business operations rather than temporary, unsustainable, or one-time events. This measure can vary greatly between companies, and can only be understood in the context of a company's specific business model and strategy. Therefore, it is important to have knowledge of a company's operations and strategies in order to properly interpret the quality of income ratio.

The Quality of Income Ratio Can Only Be Interpreted Based