Quality of Earnings
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.