Concept #1: Ratios: Quality of Earnings Ratio and Earnings Management
Practice: MoneyCo had sales revenue and net income during the current year of $100,000 and $60,000, respectively. The total amount of stockholders’ equity was $600,000. The cash flow statement indicated that cash flows from operating activities, investing activities, and financing activities, were $20,000, ($30,000), and $60,000. The company also paid dividends of $10,000. What is MoneyCo’s quality of earnings ratio?