Quality of Earnings

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What It Means

Quality of Earnings refers to a formal assessment conducted by a professional accounting firm during Due Diligence to evaluate the strength of a company’s revenues. Buyers rely on a Quality of Earnings report as an important assessment of financial risk in an Acquisition.

Why It’s Important

Quality of Earnings assessments are a common and important part of Due Diligence. They provide an independent expert opinion of the underlying drivers of a company’s revenues and the reliability of the company’s financial statements.

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