Part A:
A high quality of earnings is indicated by:
Declaration of both cash and stock dividends |
A history of increasing earnings and conservative accountingmethods |
Earnings derived largely from newly introduced products |
Use of FIFO method of inventory during sustained inflation. |
Part B:
The Horseshoe Company has cash of $50,000 accounts receivable of$100,000; inventory of $250,000, prepaid insurance of $200,000 andcurrent liabilities of $300,000. What is their working capital?
Part C:
In evaluating the quality of a company's earnings, which of thefollowing factors is LEAST important?
| the accounting methods used by management |
| the trend of the company's earnings over a period of years |
| the dollar amount of earnings per share |
| the stability and sources of the company's earnings |
