Which of the following statements concerning quality of earnings is correct?
A)All other things being equal, the more cyclical the industry within which a company operates, the lower its quality of earnings.
B)The smoother the earnings stream of a company, the greater the quality of the earnings.
C)Quality of earnings is independent of business risk.
D)Quality of earnings is largely beyond management's control.

Question

Quizplus · Accepted Answer

Cyclical industries tend to have more volatile earnings, which can lower the perceived quality of earnings due to less predictability and stability.

Which of the Following Statements Concerning Quality of Earnings Is