What to look for: Quality

Important attributes to look for in an earnings statement - QUALITY

As the market exerts ever-increasing pressure on companies to perform to a stringent set of expectations, the idea of accounting "stretch" enters the picture.

Even in complying with the rules, companies have latitude to apply accounting principles in ways that make performance look better.

This lattitude can affect the quality of earnings reports.

Recent legislation and standardizations like the Sarbanes-Oxley Act, have brought financial reporting generally more in line with reality.