Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities
of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000.
a. Calculate the quality of earnings ratio. What does this ratio tell you?
b. Kabutell, Inc. reported the following in its annual reports for 2011-2013:
($ million)
2011
Cash Flow from Operations
$477
Capital Expenditures (CAPEX)
$461
(Click on the icon in order to copy its contents into a spreadsheet.)
Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results?
a. What is Kabutell's quality of earnings ratio?
% (Round to one decimal place.)
2012
$403
$447
C
2013
$471
$455
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Transcribed Image Text:(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000. a. Calculate the quality of earnings ratio. What does this ratio tell you? b. Kabutell, Inc. reported the following in its annual reports for 2011-2013: ($ million) 2011 Cash Flow from Operations $477 Capital Expenditures (CAPEX) $461 (Click on the icon in order to copy its contents into a spreadsheet.) Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results? a. What is Kabutell's quality of earnings ratio? % (Round to one decimal place.) 2012 $403 $447 C 2013 $471 $455
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