Question: Loder Company had a good year, and recorded a large gain on the sale of a discontinued business segment. Bates Company, on the other hand,

Loder Company had a good year, and recorded a large gain on the sale of a discontinued business segment. Bates Company, on the other hand, had no discontinued business segments on its income statement. Otherwise, both income statements were very similar. Loder Company announced earnings of $1.25 per share and Bates announced earnings of $1.20 per share. Your friend Bob tells you that you should invest in Loder because it has higher quality earnings because it is larger. What is your response?

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