Earnings quality

Earnings quality, in accounting, refers to the ability of reported earnings (income) to predict a company's future earnings. It is an assessment criterion for how 'repeatable, controllable and bankable' a firm's earnings are, amongst other factors, and has variously been defined as the degree to which earnings reflect underlying economic effects, are better estimates of cash flows, are conservative, or are predictable. Earnings quality, in accounting, refers to the ability of reported earnings (income) to predict a company's future earnings. It is an assessment criterion for how 'repeatable, controllable and bankable' a firm's earnings are, amongst other factors, and has variously been defined as the degree to which earnings reflect underlying economic effects, are better estimates of cash flows, are conservative, or are predictable.