Lee Company has provided the following information: • Cash flow from operating activities,$240,000
• Net income,$204,000
• Interest expense,$20,000
• Interest cash payments,$10,000
• Income tax payments,$140,000
• Income tax expense,$136,000
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Lee's quality of income ratio is closest to:
A)1.18
B)0.85
C)1.76
D)0.74

Question

Quizplus · Accepted Answer

The quality of income ratio is calculated as cash flow from operating activities divided by net income. For Lee Company, this is $240,000 / $204,000 = 1.176, which rounds to 1.18.

Lee Company Has Provided the Following Information: • Cash Flow