Which of the Following Would Indicate High Quality Earnings for a Company

question 41

Multiple Choice

Which of the following would indicate high quality earnings for a company?

• A)Increasing revenue while cash from operations is stable.
• B)Increasing net income while cash from operations decreases.
• C)Revenue and net income that move together.
• D)Net income and cash flow from operations that move together.

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Definitions:

Law of Large Numbers

A principle that states that as a sample size grows, its mean will get closer to the average of the whole population.

Probability Assignment Rule

A principle used to assign probabilities to outcomes of a random experiment, ensuring the probabilities are non-negative and sum to one.

Independent Events

Two or more events in probability with the outcome of any one event not influencing or being influenced by the outcome of the other event(s).

Fair Coin

A theoretical coin that has an equal likelihood of landing on heads or tails, often used in probability and statistics to model random events.