Explore BrainMass

High Quality Earnings and Sustainable Income

What is the Definition of the "High Quality of Earnings"? Why is this important in an organization?

What is the Definition of "Sustainable Income"?

© BrainMass Inc. brainmass.com June 19, 2018, 6:16 pm ad1c9bdddf

Solution Preview

As per investor words, "High quality of Earnings" is the degree to which earnings are attributed to aspects of the company's business, as opposed to external forces. If a company has a change in earnings derived from a decrease in production costs or an increase in sales, they are said to have a high quality of earnings. If a company's earnings are attributed to outside sources such as inflation; this is seen as low quality of earnings.

Thus, high quality of earnings refers ...