Question: need an answer for this in a Memo with an authratative literature Case 5-2 Earnings Quality Economic income is considered to be a better predictor

need an answer for this in a Memo with an authratative literature

Case 5-2 Earnings Quality

Economic income is considered to be a better predictor of future cash flows than accounting income is. A technique used by securities analysts to determine the degree of correlation between a firms accounting earnings and its true economic income is quality of earnings assessment.

Required:

a.Discuss measures that may be used to assess the quality of a firms reported earnings.

b.Obtain an annual report for a large corporation and perform a quality of earnings assessment.

(Schroeder 177)

Schroeder, Richard G., Myrtle Clark, Jack Cathey. Financial Accounting Theory and Analysis: Text and Cases, 11th Edition. Wiley, 2013-11-04. VitalBook file.

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