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Krushi Parekh, CA Saurabh Savla, CA Ronak Chheda CA

Quality of Earnings – Systematic Assessment to Know Your Risk

Systematic Assessment of Quality of Earnings

By | Company Insights, Corporate Governance, Quality of Earnings | No Comments

While analyzing a company, a systematic approach to assess the Quality of Earnings is one of the important processes we follow to identify risks and minimize the chances of facing a permanent loss of capital.

The central idea in this example is “KYR” or “Know Your Risk”. Understanding risks can help in:
a. Furthering qualitative check on companies.
b. Bucketing companies along the “Certainty Curve”
c. Depending on risk appetite and mandate, position-sizing in the portfolio

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