Part A:

A high quality of earnings is indicated by:

Declaration of both cash and stock dividends

A history of increasing earnings and conservative accounting methods

Earnings derived largely from newly introduced products

Use of FIFO method of inventory during sustained inflation.

Part B:

The Horseshoe Company has cash of $50,000 accounts receivable of $100,000; inventory of $250,000, prepaid insurance of $200,000 and current liabilities of $300,000. What is their working capital?

	$600,000
	$300,000
	2.0
	1.33

Part C:

In evaluating the quality of a company's earnings, which of the following factors is LEAST important?

	the accounting methods used by management
	the trend of the company's earnings over a period of years
	the dollar amount of earnings per share
	the stability and sources of the company's earnings