Quick Definition

Quality of earnings refers to the extent to which a company's reported income reflects its true economic performance, emphasizing the sustainability and reliability of its income sources.

Examples

• 1A company consistently generating revenue from its core operations rather than one-time gains.
• 2A firm with stable and predictable earnings over several years, indicating high-quality earnings.
• 3A business that has minimal adjustments or non-recurring items in its financial statements.
• 4Companies with transparent and conservative accounting practices that provide a true picture of financial health.

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