A company prints GAAP EPS of $0.40 and adjusted EPS of $1.10. What usually explains a gap that size?

Items management excludes as one off or non cash, such as stock based compensation and restructuring charges

A change in the tax rate between the two calculations

Revenue recognized in a different currency

The difference between basic and diluted share counts

A company beats on both revenue and EPS, and the stock drops 9 percent. What is the most common reason?

Guidance for the coming quarter came in below what analysts were modeling

The beat was on adjusted rather than GAAP numbers

The company announced a dividend at the same time

Trading volume was too low for the price to hold

A software company shows a large and growing deferred revenue balance. What does that represent?

Cash already collected for service it has not yet delivered, carried as a liability

Revenue it expects to bill customers next quarter

Invoices it has sent but not yet collected

Sales booked by resellers that have not reached end customers

Revenue grew 8 percent year on year while accounts receivable grew 40 percent. What should that prompt you to check?

Whether sales were pulled forward on looser credit terms, so cash collection is lagging reported revenue

Whether the company has raised its dividend too aggressively

Whether the share count has been diluted by an acquisition

Whether the auditor changed during the year

Net income stays flat at $500 million while buybacks cut the diluted share count from 200 million to 190 million. What is the new EPS?

$2.50, unchanged, because net income did not move

Why do experienced readers treat the conference call as more important than the press release?

Management gives the outlook and takes analyst questions, and the answers often move the stock more than the printed quarter

The call is where the audited numbers are disclosed for the first time

Companies are required to reveal their largest customers on the call

Only the call figures are filed with the SEC

An option on a stock has an implied volatility of 90 percent the day before earnings and 45 percent the morning after. Why?

The uncertainty the options were pricing has been resolved, so extrinsic value collapses

Option volume falls sharply once the report is out

The exchange resets volatility inputs after every announcement

Market makers widen spreads after the release

Stocks quiz intermediate

Reading Earnings Reports Quiz: 10 Questions

Ten questions on pulling the story out of a quarterly report in twenty minutes.

10 questions · about 7 minutes · instant explanations · nothing you answer leaves your browser

AI-assisted, reviewed and edited by Beth Ruelos. How we use AI

Sep 23, 2026 7 min read

About this quiz

Work through EPS, margins, free cash flow and guidance with real numbers, and find out why a company can beat on both lines and still fall. Each question comes with a short explanation of the right answer and a link to the guide that teaches it, so a wrong answer is a reading list rather than a dead end.

The quiz draws on the Stocks section. If you are new to the topic, start with the guides below, then come back and test yourself. Scores are calculated in your browser and are not stored or sent anywhere.

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Is this quiz free?

Yes. There is no account, no email capture and no paywall. The questions are scored in your browser and nothing about your answers is sent anywhere.

What score counts as passing?

Seven out of ten is a solid result for an intermediate quiz with arithmetic in it. If the calculation questions are what tripped you, work through the same numbers on paper before you move on.

Do I need an accounting background?

No. Everything here comes from the income statement, the cash flow statement and the guidance section of a normal quarterly release, and each explanation shows the arithmetic behind the right answer.

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