The Best Measure of a Firm's Sustainable Income Is

question 63

Multiple Choice

The best measure of a firm's sustainable income is: 

• A) net income.
• B) income from continuing operations.
• C) income before extraordinary items.
• D) income before extraordinary item and change in accounting principle.

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Definitions:

Scenario Analysis

A method of examining potential future occurrences by evaluating different possible results or scenarios.

Sensitivity Analysis

A strategy for determining the influence that different independent variable levels have on a targeted dependent variable, under predefined assumptions.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase profits by increasing sales.

Forecasting Errors

Discrepancies between predicted values and the actual outcomes that were not anticipated in statistical forecasts.