Quality of Earnings
Written by Christopher Krassnig - Founder - Kairos Exchange and ZenoX Media.
Published
- Checks in every memo8
- Automatic on day one3 of 8
- Read by handad spend and processor payouts
- Tracked ecom salesEUR 200M+ZenoX ad-management figures, not Kairos deal volume - Kairos hasn't closed a deal yet.
Quality of Earnings is an outside check on a company's real profit, built from bank and order records instead of the numbers management wrote down. It looks for one-time items, timing gaps, and add-backs that make profit look bigger than it is. Lenders and buyers pay for it before they wire real money. It is priced for big deals, not a single small store.
What a Full Report Contains
An accountant rebuilds the earnings independently: revenue traced back to bank deposits rather than a summary spreadsheet, one-time and non-operating items stripped out, add-backs challenged line by line, and working capital checked for swings a simple profit number hides. Lenders will not lend and acquirers will not wire real money against management's own numbers alone, so the report exists to answer a question neither side can answer for themselves: is this profit real, and does it repeat. That logic holds at every deal size. Only the price does not, because a full report is built and priced for the multi-million-dollar deals it was designed to serve, not a single small store.
Not to Be Confused With
- An Audit
- Quality of earnings asks whether the reported profit is real and likely to repeat, rebuilt from bank and order records rather than assumed. An audit asks a narrower question: whether the financial statements follow accounting rules, regardless of whether the profit they report is trustworthy.