The quality of earnings is an indication of the sustainability of earnings into future accounting periods.

Question

Quizplus · Accepted Answer

The statement is true. The quality of earnings refers to the degree to which earnings accurately reflect the economic performance of a company and are likely to continue into the future. Investors and analysts examine a company's financial statements, including its income statement, balance sheet, and cash flow statement, to assess the quality of earnings. Companies with high-quality earnings are more likely to maintain or increase their earnings over time, while those with low-quality earnings may struggle to do so.

The Quality of Earnings Is an Indication of the Sustainability