The following information is presented from the financial statement of four companies that operate in the same industry, use similar processes, and are competitors in the same market. Based on this limited information, which company likely has the weakest quality of earnings?
A) Company 1
B) Company 2
C) Company 3
D) Company 4 Solution B, inventory changes are not in line with changes in sales.

Question

The following information is presented from the financial statement of four companies that operate in the same industry, use similar processes, and are competitors in the same market.  Based on this limited information, which company likely has the weakest quality of earnings?
A) Company 1 
B) Company 2 
C) Company 3 
D) Company 4 Solution B, inventory changes are not in line with changes in sales.

Quizplus · Accepted Answer

The Answer of The following information is presented from the financial statement of four companies that operate in the same industry, use similar processes, and are competitors in the same market.  Based on this limited information, which company likely has the weakest quality of earnings?
A) Company 1 
B) Company 2 
C) Company 3 
D) Company 4 Solution B, inventory changes are not in line with changes in sales.

The Following Information Is Presented from the Financial Statement of Four