What is earnings quality and how to identify earning manipulation?
Earnings Quality means how comfortable are you with the way a company defines its earnings. Are the earnings believable & trustworthy? If yes, you own a stock with good earnings quality. (1/3) #investing #stocks

Red flags to identify companies for poor earning quality
1. Cashflows got to follow the earnings, if there are serious differences between cash flows & earnings, get alerted!
2. Rise in receivables should be in line with the rise in operating revenues. If not, ask why? (2/3)

3. Inorganic Growth by acquisitions has to be analysed from a different perspective. Observe onetime expenses done in the name of restructuring along with amortization of goodwill.
4. Be suspicious of companies that are meeting analyst's predictions exactly & every time! (3/3)