Glossary

A B C D E F G H I K L M N O P Q R S T U V W Y
Glossary Index / Quality of Earnings

Quality of Earnings

The quality of earnings refers to the number of earnings attributable to higher sales or lower costs rather than artificial profits created by accounting anomalies such as inflation of inventory.

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.