Question

ValTrick Pharma has made many acquisitions. In each one it has limited its ownership stake to 49% of the acquired company. ValTrick meticulously audits each financial statement and scores A+ rated corporate governance. They’ve have never had conflicts with regulators or auditors. Earnings quality will likely be judged as:

a. Acceptable by regulators & compliant with local GAAP.

b. Low-quality due to lack of completeness.

c. Low-quality due to classification.

Answer 1

As the financial statements were rated as A+, there would be the least chance of classification or completeness issue.

Hence, Earnings quality will be judged as:

a. Acceptable by regulators & compliant with local GAAP.