An Analyst Has Calculated the Ratio of Research and Development

question 69

Multiple Choice

An analyst has calculated the ratio of research and development expenses to sales for a company he is following and noticed that it is significantly lower this year than in the previous years.What might this be an indication of?

• A)That management might be attempting to increase current earnings.
• B)That management might be attempting to increase future earnings.
• C)That the earnings quality is higher than it was before.
• D)That the profitability of the company is higher than it was before.

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