Quality Of Earnings

What Does Quality Of Earnings Mean?
The amount of earnings attributable to higher sales or lower costs rather than artificial profits created by accounting anomalies such as inflation of inventory.

Investopedia explains Quality Of Earnings
Quality of earnings is considered poor during times of high inflation. Also, earnings that are calculated conservatively are considered to have higher quality than those calculated by aggressive accounting policies.

Filed Under: Accounting

Related Terms

Cookie Jar Accounting
Earnings
Generally Accepted Accounting Principles - GAAP
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How To Evaluate The Quality Of EPS - Companies can manipulate their numbers, so you need to learn how to determine the accuracy of EPS.
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