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 cash generated by operations higher than the amount of profit. This means that the company's earnings are of high quality because they are not relying on non-operational sources to generate cash. A high quality of earnings is generally seen as a positive attribute in a company.

A Quality of Earnings Ratio Higher Than One Is an Indicator