Earnings Quality Score
Not all profits are created equal. Some come from sustainable core operations, others from one-time gains or accounting maneuvers. The Earnings Quality Score checks whether profits are real, recurring, and backed by actual cash flow.
By verifying cash flow alignment with net income, detecting one-time gains, and assessing operating profit purity, it helps you see through surface numbers and find genuinely high-quality earnings.
Cash Flow vs. Net Income Verification
Verify whether operating cash flow supports reported profits — spot companies that are "rich on paper" only.
One-Time Gains Detection
Identify how asset sales, subsidies, and other non-recurring items inflate reported earnings.
Operating Profit Purity Check
Analyze the share of core business profit in total earnings to judge whether profit sources are healthy.
Expense Ratio Analysis
Track trends in SG&A, admin, and R&D expense ratios to spot signals of improving or deteriorating efficiency.
What goes into the earnings quality score
The score is meant to answer one question: are reported earnings turning into durable cash-producing economics? A high score should be backed by operating cash flow, recurring margins, conservative balance-sheet behavior, and clean working-capital movement.
Core checks
- - Cash conversion: operating cash flow and free cash flow compared with net income.
- - Accrual pressure: receivables, inventory, and other working-capital movements that can pull earnings away from cash.
- - Profit durability: recurring operating margin, segment quality, and the absence of large one-time gains.
What you get
- - A score that separates accounting profit from cash-backed profit.
- - Narrative notes explaining whether the latest year is normal, transitional, or distorted.
- - Red flags such as falling cash conversion, margin compression, or earnings driven by non-core items.
A quality score is a screen, not a final answer. Some strong businesses temporarily score lower during investment cycles, restructuring years, or major acquisitions.
Try It Now
Enter a ticker or company name to get an earnings quality score instantly.