Answered: Th e information provided by a…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter4: Profitability Analysis

Section: Chapter Questions

Problem 3QE

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Question

Th e information provided by a low-quality fi nancial report will most likely :
A . decrease company value.
B . indicate earnings are not sustainable.
C . impede the assessment of earnings quality.

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SOLUTION:-

Financial reporting quality is related to the quality of the information contained in financial reports. A good quality financial reports gives information which useful for decision making and which also represents the true picture of the financial condition of company while on the other hand Low-quality financial reports impede assessment of earnings quality. Financial reporting quality is separate from earnings quality.

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