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Quality of Earnings
Term category: Stocks, Finance/Accounting
In 10 words or less: Refers to the amount of earnings that is likely recur.

Definition: Quality of earnings is usually mentioned when referring to earnings announcements.

StockJargon Advice: Companies whose earnings are largely the result of their operations are said to have high quality earnings.  Companies who generate a lot of earnings through murky financial accounting are said to have low quality earnings.  High quality earnings are more likely to persist into the future.

Companies often try to manipulate their earnings numbers by changing their accounting measures.  This might work in the short-term but it'll eventually come back to hurt the company.

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