Question
During 20X1 Beta Company reported a quality of income ratio [= net cash flows from operating activities/net income] of 80%. In 20X2 Beta Company reported
During 20X1 Beta Company reported a quality of income ratio [= net cash flows from operating activities/net income] of 80%. In 20X2 Beta Company reported cash flows from operating activities of $70,000, depreciation expense of $5,000, and net income of $100,000. Which one of the following statements is correct (true)?
a. the quality of income ratio improved from 20X1 to 20X2
b. the 20X2 quality of income ratio is 75%
c. Betas 20X2 net income of $100,000 must be larger than its 20X1 net income
d. a greater percentage of Betas 20X1 net income was collected in cash than was collected of Betas 20X2 net income
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