Why should the effective tax rate be evaluated when assessing earnings? (a) It is important to understand

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Why should the effective tax rate be evaluated when assessing earnings?

(a) It is important to understand whether earnings have increased because of tax techniques rather than from positive changes in core operations.

(b) Effective tax rates are irrelevant because they are mandated by law.

(c) Effective tax rates do not include the effects of foreign taxes.

(d) Net operating losses allow a firm to change its effective tax rates for each of the five years prior to the loss.

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Understanding Financial Statements

ISBN: 9781292101552

11th Global Edition

Authors: Lyn Fraser, Aileen M. Ormiston

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