Many investors and analysts believe that a corporation's ability or inability to generate earnings in the future may be one of the most significant factors that account for an increase or decrease in the value of a stock.

Question

Quizplus · Accepted Answer

This statement is true. Investors and analysts often evaluate a company's earnings potential to determine the relative value of its stock. If a company is expected to generate strong earnings growth in the future, its stock price may increase. On the other hand, if a company is expected to struggle to maintain or grow its earnings, its stock price may decline.

Many Investors and Analysts Believe That a Corporation's Ability or Inability