What does a Quality of Earnings analysis include?

A Quality of Earnings (QoE) analysis provides deep insight into the sustainability and accuracy of a company's reported earnings. Harbor View Consulting's QoE analysis examines historical earnings quality, identifies non-recurring items, and assesses the reliability of projected performance. Our comprehensive approach includes revenue quality assessment examining customer concentration and contract terms, expense analysis identifying one-time costs and run-rate adjustments, working capital normalization revealing true cash generation capacity, and EBITDA adjustments providing accurate valuation metrics. We scrutinize accounting policies for aggressiveness, evaluate management estimates and reserves, and identify potential financial reporting risks. For Maryland businesses engaged in transactions, our Baltimore-based team also analyzes pro-forma adjustments, synergy assumptions, and integration considerations. The resulting report provides buyers and sellers with confidence in the underlying business economics, facilitating successful transaction completion.