Quality of Earnings Reports
All too often we hear of transactions that did not work out as planned.
The ability to identify critical trends and understand what is behind the numbers can have a real impact on the transaction value and its ultimate success.
The primary objective of a quality of earnings report is to assess the sustainability and accuracy of historical earnings as well as the achievability of future projections. A QOE report that broadens the scope to include a review of the company’s integrity, management assessment, and an operational overview may lend critical information on the enterprises ability to generate future earnings.
A well-researched and developed QOE report goes beyond an accounting review of the financial statements. It looks at whether an enterprise and proposed transaction have the necessary financial, human, capital, and other resources to execute the strategic plan.
QOE report may cover a wide range of areas including; management, operational, marketing and financial matters. Financial due diligence (often referred to as “accounting” due diligence) is focused on providing potential investors with an understanding of a company’s: