If a company generates $3.15 in operating cash flows for every $1 of net income then the company's:
A)times interest earned ratio is 3.15.
B)net profit margin is 3.15.
C)return on equity is 3.15.
D)quality of income ratio is 3.15.

Question

Quizplus · Accepted Answer

The given ratio is the quality of income ratio, which measures the extent to which a company's reported earnings are backed by cash flows from operations. A ratio of 3.15 indicates that the company's operating cash flows are significantly higher than its net income, which suggests that the quality of its earnings is high.

If a Company Generates $3