Course · Act III: Reading the Numbers · Chapter 17
Quality of earnings
How repeatable a company’s profit is and how well it turns into cash: one-off items, adjusted earnings and the red flags analysts look for.
Key terms
- Quality of earnings
- How repeatable profit is, and how well it turns into cash.
- One-off items
- Gains or charges that won’t recur; remove them to see underlying earnings.
- Adjusted / non-GAAP earnings
- Company-defined profit excluding chosen items. Check what was excluded.
“Quality of Earnings” is part of the full course: 5 puzzles on quality of earnings, with a story that carries through all five acts. Try this act’s free chapter, “Margins”, first.