A company would likely "take a bath"
A)in periods of extraordinarily high net income.
B)just prior to creating hidden reserves.
C)when it has experienced an extremely poor year.
D)when its quality of earnings is very high.

Question

Quizplus · Accepted Answer

"Taking a bath" refers to a company deliberately incurring losses, such as writing off bad debts or obsolete inventory, in order to reduce their tax liability. This is often done after an extremely poor year in which the company's profits have suffered.

A Company Would Likely "Take a Bath