Quality of Earnings

Paper Summary:

The paper attempts to determine whether a company, ACE Aviation, has managed its business to the extent that it has resulted in the growth of sales or revenue and the reduction of costs. The paper considers whether the company's earnings are controllable and if the revenue is in the form of real cash. The paper analyzes ACE Aviation and concludes that it is largely successful in increasing its revenue and reducing its controllable costs. The paper reveals that ACE Aviation's earnings could be considered stable and sustainable. Thus, it appears that the company's earnings rate reasonably high in terms of quality.

Outline:
Introduction
Analysis
Conclusion

From the Paper:

"Thus, in both instances, the company has illustrated how it managed to achieve its goals of increasing its revenues and reducing its costs. And given the circumstances by which they came about, i.e., recovery of the market, the rising cost of fuel, that the fact that the company changed the accounting policy for the recognition of its obligations relating to the loyalty program by deferring passenger revenues equivalent to the fair value of Miles earned through air travel, and others like them, earnings came surprisingly high or to put in another way, the losses came surprisingly low."

Sample of Sources Used:

• "Quality of Earnings." Investopedia.Com. 2006.Investopedia Inc. 26 March 2006 http://www.investopedia.com/terms/q/qualityofearnings.asp
• ACE Aviation. ACE Aviation 2004 Annual Report. Toronto: ACE Aviation, 2005.
• ACE Aviation. Annual Information Form. Toronto: ACE Aviation, 2005.
• Ben McClure. "Earnings: Quality Means Everything." Investopedia.Com. 2002.Investopedia Inc. 26 March 2006 http://www.investopedia.com/articles/02/103002.asp

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