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Understanding Quality of Earning Reports

Gain a better understanding of what a quality of earnings report means and who needs one.

This course will provide you with an understanding of the process of conducting a quality of earnings engagement and how to conduct this analysis. You will learn how to identify add-backs to earnings, explain financial trends and walk EBITDA forward. You will learn how to use techniques, including trend analysis, common-size analysis, and benchmark analysis, to measure the quality of earnings.

Learning Objectives

  • You will be able to identify the ratios calculated in Quality of Earnings Report.
  • You will be able to identify the analysis' prepared in Quality of Earnings Report.
  • You will be able to differentiate between the Quality of Earnings report and the Quality of Assets report.
  • You will be able to identify the most important part of the quality of earnings engagement

57 minutes
Course Exam
Certificate of Completion
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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Process of Quality of Earnings Engagement

  • The Focus on EBITDA as a Measure of Earnings (Earnings Before Interest, Taxes, Depreciation, and Amortization)
  • Quality of Earnings From the Buyer's Perspective
  • Quality of Earnings From the Seller's Perspective

EBITDA Add-Backs

  • Owner Perquisites - What Is a Perk vs. Fair Compensation?
  • Recurring vs. Nonrecurring Income and Expenses
  • Normalizing Start-Up Operations

EBITDA Walk Forward

  • Identify Annual Variances That Impact EBITDA
  • Learn How to Walk EBITDA Forward From One Year to the Next
  • How to Present the Walk Forward in a Meaningful Context

Benchmark Analysis

  • Comparison of Recent Financial Trends to Industry Benchmarks
  • Sources of Benchmarks
  • How to Identify Valid Reasons for Variances and How to Present Them

Trend, Common Size, and Ratio Analysis

  • Understand How Annual Trends Reveal Relationships Between Certain Expenses and Revenue
  • Understand How to Spot Margin Growth and Attrition
  • Understand How Product Mix Impacts the Quality of Earnings
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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

This course was last revised on January 19, 2022.

Call 1-866-352-9540 for further credit information.

  • CPE/NASBA - QAS Self Study 1.6 including Accounting 1.6
     
  • Lorman Education Services is registered with the National Association of State Boards of Accountancy (NASBA) as a QAS Self Study sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org. For more information regarding administrative policies such as complaint and refund, please contact our offices at 866-352-9539. CPE Credit: Maximum Credit Hours: 1.6 each session (based on a 50 minute credit hour). You must attend at least 50 minutes to obtain credit. Field of Study: Accounting for 1.6 hours. Prerequisite: . Level of Knowledge: Intermediate. Teaching Method: Seminar/Lecture. Advance Preparation: None. Delivery Method: QAS Self Study. Please refer to the information in this advertisement for outline, course content and objectives. Upon completion of this course, you will receive a certificate of attendance. Final approval of a course for CPE credit belongs with each state's regulatory board.
     

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This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Michele Avery, CPA/ABV, CVA, MAFF

Michele Avery, CPA/ABV, CVA, MAFF

LaPorte CPAs & Business Advisors

  • Director of Forensic and Valuation Services
  • Practice is focused solely on business valuation, including transactions of business interests, litigation issues, and estate matters
  • Regular speaker on business valuation and business transactions for CLE and CPE for attorneys and accountants
  • AICPA Forensic and Valuation Services Section, Louisiana Society of CPAs - Forensic and Valuation Services Committee
  • M.B.A. degree, Louisiana State University; B.A. degree, University of Wisconsin - Superior
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Why Lorman?

Over 35 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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Product ID: 409490
Published 2022
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