When assessing earnings quality, financial analysts are concerned that management may attempt to manipulate information to make earnings appear better or worse than they really are. Which of the following would NOT suggest poor earnings quality?
A. reduction of the allowance for doubtful accounts
B. consistent application of GAAP
C. significantly higher net income than cash flows from operations
D. reliance on share issuances to offset repeated negative cash flow from operations
Answer:B
When assessing earnings quality, financial analysts are concerned that management may attempt to manipulate information to make earnings appear better or worse than they really are. Which of the following would NOT suggest poor earnings quality?
A. reduction of the allowance for doubtful accounts B. consistent application of GAAP C. significantly higher net income than cash flows from operations D. reliance on share issuances to offset repeated negative cash flow from operations