quality of earnings

Definition

The degree to which earnings are attributed to aspects of the company's business, as opposed to external forces. If a company has a change in earnings derived from a decrease in production costs or an increase in sales, they are said to have a high quality of earnings. If a company's earnings are attributed to outside sources such as inflation, this is seen as low quality of earnings.

Use quality of earnings in a sentence

The quality of earnings was a fun thing to determine and we all took our time figuring it out and working with it.

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We had seen tremendous results this quarter but there was concern that we only got lucky as the quality of earnings were called into question.

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After making the changes to the production methods, they were able to see an increase in their quality of earnings in their financial statements.

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