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Westinghouse had just issued its annual report to shareholders for the year ending 31 December 1973. The report indicates that sales have increased to a record $5.7 billion but that net income is down almost 20% from its record level of $199 million in the previous year. The chairman's letter to shareholders suggests that while earnings were not very good in 1973, he expects them to recover in 1974. May be used as either the 1st or 2nd case in a 2nd-year MBA course dealing with the analysis of corporate financial reports. The objective is to introduce students to the concept of ?quality of earnings?. Much of the focus of the case deals with the flexibility management has in making accounting decisions which determine net income.