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The operating funds ratio can indicate earnings quality. A low ratio suggests a firm may be aggressive in measuring net income so that earnings are
The operating funds ratio can indicate "earnings quality". A low ratio suggests a firm may be aggressive in measuring net income so that earnings are not turning into cash flow from operations at an appropriate rate. Which of the following examples would lead to a low ratio? Accounts Receivable growing faster than sales because of channel stuffing, which leads to a negative working capital adjustment O Accounts Receivable shrinking relative to sales which leads to a positive working capital adjustment
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