Which of the Following Statements Regarding Quality of Income Ratio

question 13

Multiple Choice

Which of the following statements regarding quality of income ratio is NOT true?

• A) A quality of income ratio will increase if a company's working capital management allows current assets such as inventory to increase out of control.
• B) Variations in the ratio can be seasonal and are the result of sales fluctuations rather than reasons for alarm.
• C) The quality of income ratio measures the portion of income that was generated in cash.
• D) The quality of income ratio is useful when compared to industry competitors or to prior periods.

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Definitions:

Driveshaft Vibration

Unwanted oscillations of the driveshaft, often due to imbalance or misalignment, that can lead to driveability issues or damage.

U-joint Operating Angles

U-joint Operating Angles refer to the angles at which universal joints (U-joints) operate, connecting rotating shafts in a drive system, crucial for efficient power transmission and reducing wear.

Out-of-Balance

Refers to an uneven distribution of weight causing parts of a rotating object (like a tire or drive shaft) to move unevenly, often resulting in vibration or uneven wear.

Trunnion Seals

Seals used in the trunnion area of a machine or vehicle to prevent leakage of fluids around the trunnion bearings.