---
title: "What Is Quality of Earnings? Private Equity Glossary"
description: "A quality of earnings report is an accountant's review that tests whether a company's reported profits are accurate, complete and likely to repeat."
url: https://capstreet.multisites.ai/glossary/quality-of-earnings
publisher: Capstreet
phone: +1-713-332-2700
contact: https://capstreet.multisites.ai/contact
---

Process

# Quality of Earnings

A quality of earnings report is an accountant's review that tests whether a company's reported profits are accurate, complete and likely to repeat.

A quality of earnings report, or QoE, is a deep check of your profit figures by an outside accounting firm. The accountants look at revenue, costs, cash flow and one-time items. They test whether the earnings you report are real and repeatable.

For example, a company reports $5 million of EBITDA. The review finds $300,000 of one-time income and confirms $200,000 of owner costs that a buyer can [add back](https://capstreet.multisites.ai/glossary/add-backs). The supported number becomes the base for price.

A QoE matters because buyers price on proven earnings, not claims. Owners often order one before going to market, so surprises come out early. That can protect your price and keep the process on schedule.

See how the report fits the timeline in the [quality of earnings guide](https://capstreet.multisites.ai/guides/quality-of-earnings). Related terms are [adjusted EBITDA](https://capstreet.multisites.ai/glossary/adjusted-ebitda) and [due diligence](https://capstreet.multisites.ai/glossary/due-diligence).

[Read nextHow to prepare your company for a private equity sale: a 12 to 24 month plan](https://capstreet.multisites.ai/guides/how-to-prepare-your-company-for-a-private-equity-sale)

## Related terms

-   [Adjusted EBITDA](https://capstreet.multisites.ai/glossary/adjusted-ebitda)
-   [Add-Backs](https://capstreet.multisites.ai/glossary/add-backs)
-   [Due Diligence](https://capstreet.multisites.ai/glossary/due-diligence)

## Ready to get started? Let’s talk.

Tell us about your company and what you want next. Conversations are private, and there is no obligation.

[Start a conversation](https://capstreet.multisites.ai/contact)

[(713) 332-2700](tel:+1-713-332-2700)[connect@capstreet.com](mailto:connect@capstreet.com)

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