Lucas Company has provided the following information: • Cash flow from operating activities, $360,000
• Net income, $306,000
• Interest expense, $30,000
• Interest cash payments, $20,000
• Income tax payments, $240,000
• Income tax expense, $246,000
What was Lucas' earnings quality ratio?
A)0.85
B)0.74
C)1.18
D)0.93

Question

Quizplus · Accepted Answer

The earnings quality ratio is calculated as cash flow from operating activities divided by net income. Here, it is $360,000 / $306,000 = 1.18.

Lucas Company Has Provided the Following Information: • Cash Flow