What is a quality of earnings report?

A quality of earnings report is a comprehensive analysis of a company's financial statements, focusing on the accuracy of the company's reported earnings and the reliability of its financial statements. The report is typically prepared by a financial analyst or accounting firm and is intended to provide investors and stakeholders with a deep understanding of how the company's earnings are generated and whether they are sustainable over the long term. The quality of earnings report typically includes an analysis of revenue recognition, the accuracy of expense reporting, and the reliability of cash flow reporting. The report may also analyze key performance indicators, such as gross margin, operating margin, and return on equity, to provide additional insights into the company's financial health. Overall, the quality of earnings report offers a valuable tool for investors and stakeholders to assess a company's financial stability and identify potential risks or opportunities for growth.