CFA Practice Question

There are 90 practice questions for this study session.

CFA Practice Question

High earnings quality is most likely to ______
A. indicate that lots of cash flows will be generated in the future.
B. indicate the firm is growing fast.
C. help analysts predict future earnings.
Explanation: The main goal of high earnings quality is to better forecast future company performance.

User Contributed Comments 2

User Comment
elbaker Hahaha, nothing will help with analyst earnings estimates. Multiple studies throughout many time periods have routinely shown that sell-side analysts have a horrible track record of earnings predictions.
Shortseller Not to mention that high earnings quality doesn't mean future good earnings... RIMM/MOT prime examples, lots of FCFF till their products were obsolete.
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