Quality of Earnings analysis includes:

• Breakdown of revenue by appropriate stratification
  
• Analysis of historic revenue trend, potential mean-reversion, and issues concerning sustainability
  
• Determination of one time expenses v. recurring expenses
  
• Analysis of effect on both revenue and expenses due to management/personnel changes
  
• Synergy analysis
  
• Analysis of cash flow projections during implementation 
  
• Review of executive compensation, incentive compensation programs, third party transactions, effect of existing litigation

Quality of Earnings Reports

Quality of Earnings reports are frequently prepared during the due diligence phase of acquisition analysis. Quality of Earnings reports are prepared by an unbiased third party and are an analysis of the components or earnings (and expenses) as well as the sustainability of historic results and the achievability of projections.