Quality of Income Ratio: Definition, Formula & Analysis

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question 1 of 3

For the quality of income ratio, a ratio of less than 1.0 indicates:

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1. Earnings that do not come from the fundamental business are often called:

2. Two factors that may lead to low-quality income are _____ and _____.

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About This Quiz & Worksheet

Use the quiz/worksheet combo to see what you know about the quality of income ratio. Its meaning and formula are topics you'll see on the quiz.

Quiz & Worksheet Goals

You can test your understanding of:

  • Earnings from sources outside of the fundamental business
  • Where artificial profits can come from
  • Two factors that may lead to low quality income
  • Tool for assessing the quality of a company's earnings

Skills Practiced

  • Reading comprehension - ensure that you draw the most important details from the lesson on the quality of income ratio
  • Information recall - access the knowledge you have gained about what a ratio of less than 1.0 indicates for the quality of income ratio
  • Interpreting information - verify that you can read information about where artificial profits can come from and interpret it correctly

Additional Learning

Learn more by accessing the lesson called Quality of Income Ratio: Definition, Formula & Analysis. Other topics you can study and learn about include:

  • Definition of the quality of income ratio
  • The differences between high-quality and low-quality earnings
  • How to use the quality of income ratio
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