Examples of Poor Earnings Quality That Hinder the Forecasting of Expected

question 14

Multiple Choice

Examples of poor earnings quality that hinder the forecasting of expected future earnings include all of the following except:

• A) Earnings dominated by a substantial one-time gains from the sale of real estate tangential to the firm's operations.
• B) Reporting a large expense from a warehouse fire that was not covered by insurance.
• C) A local government corrects a processing error and a firm receives an unexpected rebate on property taxes previously paid.
• D) The company adds equipment that reduces carbon emissions in response to EPA requirements and increases production efficiency.

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Definitions:

Diversified

The quality of having a wide variety or range of different things or activities.

SWOT Analysis

A strategic planning tool that evaluates the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture.

Strengths

Positive attributes of an organization. These are internal resources and capabilities that support a company to achieve its mission, goals, and competitive advantage.

Weaknesses

Areas where a business or product lacks strength or is less competitive compared to others in the market.