Accounting Commons^™

Earnings Quality: It's Time To Measure And Report, Jodi L. Gissel, Don Giacomino, Michael D. Akers

Accounting Faculty Research and Publications

Earning's quality is an important aspect of evaluating an entity's financial health, yet investors, creditors, and other financial statement users often overlook it. Earnings quality refers to the ability of reported earnings to reflect the company's true earnings, as well as the usefulness of reported earnings to predict future earnings. The SEC and the investing public are demanding greater assurance about the quality of earnings. There is significant need for the development of a uniform definition and a consistent model to measure earnings quality. An Earnings Quality Assessment (EQA) is a proposed model that is consistent with this definition. The …