Economic income is considered to be a better predictor of future cash flows than accounting income is. A technique used by securities analysts to determine the degree of correlation between a firm’s accounting earnings and its true economic income is the quality of earnings assessment.
Required:Discuss all measures that are used to assess the quality of a firm’s reported earnings (Chapter 5).
Obtain an annual report for a large corporation and perform an assessment on earnings quality using all the measures available.
Create a presentation to articulate requirements 1 and 2. (between 5-6 mins presentation
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