Accounting Dictionary - Letter Q

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Quality of earnings
is the quality of net income, or in other words, the substance of net income and its sustainability into the future periods. Quality of earnings represents how realistic the net income is in portraying the operating performance. Indicators of a higher quality of earnings include a majority of net income from continuing operations (not one-time transactions); stable earnings trends; stable (increasing) market share; appropriate debt-equity ratio; and unqualified audit opinion. Quality of earnings concept is often used by creditors and investors.
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