Question #20
Reading: Reading 19 Equity Valuation - Applications and Processes
PDF File: Reading 19 Equity Valuation - Applications and Processes.pdf
Page: 8
Status: Correct
Correct Answer: B
Question
Which of the following would cause an analyst to have concern about a firm's quality of earnings?
Answer Choices:
A. A firm books sales when orders are shipped
B. The firm took a write off for a recently impaired asset
C. The gain on the sale of a plant was included in operating earnings
Explanation
The inclusion of gains from the sale of assets as operating income would cause the analyst
to question the quality of the firm's earnings.