Quality of Earnings Report
(QoE)
An in-depth financial analysis that validates a company's true earning power by adjusting for non-recurring items and accounting anomalies.
Overview
A Quality of Earnings (QoE) report is a rigorous financial analysis that goes beyond standard financial statements to determine the true, sustainable earnings of a business. It identifies non-recurring revenue and expenses, accounting irregularities, working capital trends, and other factors that affect the reliability of reported earnings. This report is essential for buyers, sellers, and lenders to understand the real financial picture of a business.
When It's Needed
A QoE report is typically commissioned during the due diligence phase after an LOI has been signed. Both buy-side and sell-side parties may prepare their own QoE analysis to support their respective positions in negotiations.
What We Deliver
- Adjusted EBITDA analysis with detailed add-backs and normalizations
- Revenue quality and sustainability assessment
- Working capital analysis and trends
- Identification of non-recurring and one-time items
- Cash flow verification and analysis
- Management discussion of key financial drivers
Who Benefits
- Buyers validating the financial claims of a target business
- Sellers proactively addressing financial questions before they arise
- Lenders underwriting acquisition financing
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