Quality of Earnings Explorer

Built for engineers, self-taught finance learners, and students without transaction experience. Learn why reported EBITDA can differ from sustainable earnings, work through a guided example, then practise the judgments a diligence analyst makes.

Starting point: No prior QoE experience
Time: About 60–90 minutes
Format: Learn → investigate → report

Your scenario answers and score are processed locally in this browser. The optional PDF summary is offered after the test and requires submitting your email before download. This site also uses standard usage analytics.

Your guided QoE apprenticeship

Learn to question the number, not just calculate it.

This explorer assumes no transaction-finance background. It teaches the accounting language first, then shows you what information to request, what evidence to inspect, what questions to ask, and how to turn the answers into a defensible earnings conclusion.

Engineering or operating background

Start with the foundations and use the formula, glossary and evidence prompts as you work.

Finance student or early-career analyst

Convert textbook definitions into a realistic data request, investigation and buyer-versus-seller case.

By the end, you should be able to

Reconcile reported EBITDA to the underlying P&L
Build a focused data request and management-question list
Separate accounting corrections, normalizations and risks
Assess revenue durability, margins and cash conversion
Compare seller, diligence, and evidence-supported views
Explain every material conclusion with evidence

The five labels used in the current adjustment exercises

You will learn these as a starting vocabulary. The guided case also separates economic cause, arithmetic treatment, evidence strength and buyer/seller perspective so that one label does not replace judgment.

One-time

A non-recurring cost or gain. Costs are added back; gains are deducted. The economic basis and arithmetic direction are separate decisions.

Owner

Owner or related-party terms that are not arm’s length. Above-market costs may be added back; below-market costs require a deduction.

Run-rate

Annualizes a change that is already contracted or actioned and is not fully reflected in the historical period.

Quality

A correction for accounting presentation, cutoff, capitalization, or a missing recurring stand-alone cost. The richer finding model records the exact basis.

No adjustment

A recurring feature, an unsupported future change, or a risk that should be disclosed rather than forced into EBITDA.

Your current stage is saved in this browser. Answers inside a stage are not saved, so finish the current exercise before leaving.

An educational simulation using fictional companies and figures; it is not financial, accounting, investment, or transaction advice. Scenario answers and scores are processed locally. The optional PDF download requires an email submission, and site analytics may collect standard usage data. Generated using karthikkannaiyan.com.