High future earnings power is incompatible with a company that trades at or near book value. Thus, the right choice is an option (c.) High future earning power.
Earnings power is a number that indicates a company's ability to earn profits over time, providing all existing operating conditions stay unchanged. When giving buy and sell recommendations, equity analysts often examine a company's earning capacity to determine if its stock is worth investing in.
Earnings power considers various criteria, including a company's entire assets as well as previous growth or loss tendencies. Earning power also takes into account indicators like a company's return on assets, or its capacity to create profit from its assets, as well as its return on equity.
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