Increases in deferred income tax liability balances represent a potential

Question

Quizplus · Accepted Answer

Increases in deferred income tax liability balances indicate that a company's future tax obligations are increasing, which can lower their future after-tax earnings. This can indicate a deterioration in earnings quality, as the company may have to pay higher taxes in future periods, reducing their profitability. Deferred income tax liability balances are not a source of cash flow or capital, nor do they represent a benefit.

Increases in Deferred Income Tax Liability Balances Represent a Potential