The following information is available on four different companies. All companies operate in the same industry, are of similar size, and use similar processes and equipment. Based on this limited information, which company likely has the highest quality of earnings at the end of the three year period?
A) Company 1
B) Company 2
C) Company 3
D) Company 4

Question

The following information is available on four different companies. All companies operate in the same industry, are of similar size, and use similar processes and equipment.  Based on this limited information, which company likely has the highest quality of earnings at the end of the three year period?
A) Company 1 
B) Company 2 
C) Company 3 
D) Company 4

Quizplus · Accepted Answer

Company 2 is consistent with the industry averages and also shows no P/E ratios below the industry average or declining ratio trends.

The Following Information Is Available on Four Different Companies