Earnings Quality

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 quality of earnings assessment.

Required:

a. Discuss measures that may be used to assess the quality of a firm's reported earnings.

b. Obtain an annual report for a large corporation and perform a quality of earnings assessment.

Complete Case - Earnings Quality

One scholarly articles is required as well as other supporting sources (current articles or other authored sources, or the text book, and financial schedules). Current articles have been published within the last 5 years.

All articles referenced must be cited and all citations must be referenced. Part B indicates that you are to obtain a report of a large corporation and perform a quality earnings assessment on the company.

1. Choose from one of the following companies: Cisco, Southwest Airlines John Deere, AT&T, or NIke

2. Attach the Income statement and other relevant schedules as an appendix