In this video on Quality of Earnings, we provide you with definition and its metrics.
𝐖𝐡𝐚𝐭 𝐢𝐬 𝐐𝐮𝐚𝐥𝐢𝐭𝐲 𝐨𝐟 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬?
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Earnings of quality refers to the revenue generated from the (recurring) core business activities and does not include the (non-recurring) one-off revenue generated from other sources.
𝐌𝐞𝐭𝐫𝐢𝐜𝐬 𝐨𝐟 𝐎𝐯𝐞𝐫𝐚𝐥𝐥 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐐𝐮𝐚𝐥𝐢𝐭𝐲
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#1 - Consistency of accounting policies from year to year or quarter to quarter.
#2 - Overall estimation degree or subjectivity in determining earnings.
#3 - Trend in balance of reserves
#4 - Transparency of disclosures
#5 - Discussion of nonrecurring, unusual transactions.
#6 - Presence of pro forma measures of income
#7 - Disclosure of related-party transactions
#8 - The ratio of net revenue to cash from transactions
To know more about 𝐐𝐮𝐚𝐥𝐢𝐭𝐲 𝐨𝐟 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬, you can go to 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- [ Ссылка ]
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