Investment Analysis

Quality of Earnings

Definition

What is Quality of Earnings?

The degree to which reported profit reflects sustainable operations and is supported by cash flow.

Example in practice

Profit backed by recurring cash receipts is generally higher quality than profit driven by accounting estimates.

Keep learning

The evaluation of economic, industry, company, and financial information to estimate an investment's value.

The use of mathematical models, statistics, and structured data to evaluate investments.

Management's public forecast or range for future revenue, profit, or other operating measures.

A trade or series of trades creating the appearance of activity without a genuine change in beneficial ownership.

Think you know your investing terms?

Put your knowledge to the test with a quick quiz.