Definition

Quality of Earnings (QoE)

A Quality of Earnings analysis digs into a company's reported profit to judge how sustainable and reliable it really is. Rather than accepting the income statement at face value, the analysts separate recurring, repeatable earnings from one-time gains, accounting quirks, and owner-specific costs. Buyers commission a QoE report during due diligence because the number a seller presents rarely matches the normalized earnings a new owner would actually inherit. The work often reshapes the deal, adjusting the price or the terms once the true earning power comes into focus. A solid QoE protects a buyer from paying for profit that will not repeat.