Components of increasing earnings quality include all of the following EXCEPT:
A)declining or stable operating expenses compared to sales.
B)improving gross margin compared to sales.
C)increasing cost of goods sold to sales ratio.
D)proper revenue and expense recognition.

Question

Quizplus · Accepted Answer

Increasing cost of goods sold to sales ratio indicates declining earnings quality as it suggests higher costs relative to sales, which is not a component of increasing earnings quality.

Components of Increasing Earnings Quality Include All of the Following