Generally,when a company's net income and free cash flows trend in the same direction over time,earnings are believed to have higher quality.

Question

Quizplus · Accepted Answer

When a company's net income and free cash flows trend in the same direction over time, it indicates that the company is generating sustainable profits and has sufficient cash reserves to reinvest and pay dividends. This suggests that the company's earnings quality is higher because it is not relying solely on accounting measures to boost profitability.

Generally,when a Company's Net Income and Free Cash Flows Trend