Environmental Corporation specializes in the production and sale of eco-friendly packaging. In 2014, Environmental reported net income (earnings) in excess of analyst expectations. This included a significant gain on sale of investments in the year and lower depreciation expense due to the company's change from the declining balance method (used by competitors) to the straight-line method for depreciating its equipment. Answer the following questions based only on the information provided.
(a) From the perspective of an investor, does Environmental have high quality earnings?
(b) Will the earnings reported by Environmental be discounted in the capital markets?

  • CreatedSeptember 18, 2015
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