A quality of earnings ratio higher than one is an indicator of which of the following?
A) A company's high debt position.
B) That ﬁxed assets are the company's most important resources.
C) That a company has cash generated by operations higher than the amount of proﬁt.
D) That a company has too many ﬁxed assets.

Question

Quizplus · Accepted Answer

A quality of earnings ratio higher than one indicates that a company has more cash generated from operations than its reported net income, suggesting high-quality earnings.

A Quality of Earnings Ratio Higher Than One Is an Indicator