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Earnings Quality in Business Valuation
Earnings quality is a key pillar of business valuation, reflecting how accurately reported profits represent sustainable, cash-backed performance. High-quality earnings come from repeatable operations and strong cash flow, while low-quality earnings may be inflated by one-time events, aggressive accounting, or irregularities. For buyers, brokers, and lenders, assessing earnings quality—often through adjusted EBITDA, cash flow analysis, and financial ratios—is essential for informed pricing, risk mitigation, and deal success.


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