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