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Basic Question 7 of 10
When earnings are largely comprised of accruals as opposed to cash flows, earnings will:
B. revert back to the normal level slower.
C. fluctuate more than usual.
A. revert back to the normal level quicker.
B. revert back to the normal level slower.
C. fluctuate more than usual.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe the concept of sustainable (persistent) earnings;
describe indicators of earnings quality;
explain mean reversion in earnings and how the accruals component of earnings affects the speed of mean reversion;
CFA® 2025 Level II Curriculum, Volume 2, Module 14.