Earnings quality refers to the degree to which reported earnings reflect a company's true financial performance and are sustainable over time. High earnings quality indicates that earnings are derived from core business operations, while low earnings quality may suggest that earnings are influenced by accounting practices, one-time events, or non-operational activities. Understanding earnings quality is essential for evaluating a company's financial health and making informed investment decisions.
congrats on reading the definition of earnings quality. now let's actually learn it.