If a company generates $3.15 in operating cash flows for every $1 of net income, then the company's:
A) capital acquisition ratio is 3.15.
B) net profit margin is 3.15.
C) return on equity is 3.15.
D) quality of income ratio is 3.15.

Question

Quizplus · Accepted Answer

The given ratio, $3.15 in operating cash flows for every $1 of net income, is known as the quality of income ratio. This ratio measures the proportion of net income that is generated from operating activities as opposed to non-operating activities such as investments, financing, or one-time gains/losses.

Therefore, the correct answer is D) quality of income ratio is 3.15.

If a Company Generates $3