Earnings quality

Operating cash flow divided by net income: whether reported profit arrived as cash.

How to read it

Well below 100% for years is the accrual pattern that often precedes restatements.

How to use it

Checks that reported profit turns into cash.

In Kereon

Investing · company. Not shown when net income is zero or negative, or for banks.

Also called: earnings quality, accounting risk.

Related terms

The whole glossary · Investing tools