Earnings Quality and Its Evaluation Methods
Suitable ground for “Earnings Manipulation” arising from conflicts of interest and also, due to some inherent limitations of accounting including : a) deficiencies in the estimates and forecasts of future and b) ability to use multiple methods of accounting has made a real income gains differ from that is reported in financial statements. To evaluate the earnings, of the concept of quality of earnings is used to express a sincere interest that is the expected benefit of Mr. Hicks. High earnings quality represents the usefulness of earnings information to make decisions and also more consistent with the economic benefit by Hicks.