Components of Increasing Earnings Quality Include All of the Following

question 38

Multiple Choice

Components of increasing earnings quality include all of the following EXCEPT:

• A)declining or stable operating expenses compared to sales.
• B)improving gross margin compared to sales.
• C)increasing cost of goods sold to sales ratio.
• D)proper revenue and expense recognition.

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Definitions:

Corporate Bond

A type of debt security issued by corporations to raise capital, with the promise to repay the principal along with interest on specified dates.

Tax-Exempt

Financial earnings that are not subject to taxation by the government, often applied to certain bonds and municipal securities.

Preferred Stock

Nonvoting shares in a corporation, paying a fixed or variable stream of dividends.

Cumulative Dividends

Dividends that are owed to preferred shareholders of a company and must be paid out before dividends can be distributed to common shareholders.