Many investors who analyze stocks take the numbers provided by the company at face value, but there are times when this can be a massive investing mistake.
To help shed light on what the earnings provided by a company really mean for us as investors, we reviewed the book — Quality of Earnings by Thornton O'Glove. Thornton is a Wall Street veteran known for pioneering red flag deviation analysis. 
This book is an indispensable guide to determining how much money a company is really making to help us avoid making costly blunders.

IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
07:26 - Why you shouldn’t trust your analyst or the auditors.
15:13 - What to keep an eye on when reading an annual report.
22:35 - Red flags to look out for when analyzing a company’s filings.
31:13 - How managers and accountants can legally manipulate earnings per share, however they see fit.
34:06 - Tools we can use to help determine the quality of earnings for a company.
35:55 - How we can make use of accounting items like accounts receivable and inventory.
49:36 - The impact of dividends on your returns as an investor.
53:11 - The shortfalls of GAAP accounting.
And so much more!

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES
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<li>Join the exclusive <a href="https://www.theinvestorspodcast.com/mastermind-2/">TIP Mastermind Community</a> to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.</li>
<li>Quality of Earnings <a href="https://amzn.to/40kBf7y">book</a>.</li>
<li>Quality of Earnings in <a href="https://morganandwestfield.com/knowledge/quality-of-earnings-in-ma/#:~:text=Quality%20of%20Earnings%20Report%3A%20A,revenue%20and%20earnings%20are%20sustainable.">M&A</a>.</li>
<li>Related Episode: <a href="https://open.spotify.com/episode/7CCGyu3ZUwbqiBtup9rRJK?si=0194a3296ac6449b">TIP667: Why Most Stocks Will Lose You Money w/ Hendrik Bessembinder</a>, or watch the <a href="https://www.theinvestorspodcast.com/episodes/why-most-stocks-will-lose-you-money-hendrik-bessembinder/">video</a>.</li>
<li>Related Episode: <a href="https://open.spotify.com/episode/4bHvdJl4ET1djW9n1JgkUY?si=ce43770ca43e40b5">TIP601: Junk to Gold by Billionaire Willis Johnson</a>, or watch the <a href="https://www.theinvestorspodcast.com/episodes/junk-to-gold-by-billionaire-willis-johnson/">video</a>.</li>
<li>Related Episode: <a href="https://open.spotify.com/episode/4MzTHwCOuo5oPAkFNtxrZg?si=7d351c5af26141fe">TIP656: Mastering Stock Selection with an Investment Checklist w/ Clay Finck</a>, or watch the <a href="https://www.theinvestorspodcast.com/episodes/mastering-stock-selection-with-an-investment-checklist/">video</a>.</li>
<li>Follow Clay on <a href="https://twitter.com/Clay_Finck">Twitter</a>.</li>
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Stig T. Brodersen

Preston Pysh

William Green

Clay Finck

TIP672: Quality of Earnings: Uncovering Hidden Red Flags w/ Clay Finck

Many investors who analyze stocks take the numbers provided by the company at face value, but there are times when this can be a massive investing mistake. To help shed light on what the earnings provided by a company really mean for us as investors, we reviewed the book — Quality of Earnings by Thornton [&hellip;]

We Study Billionaires Episode #951

TIP672: Quality of Earnings: Uncovering Hidden Red Flags w/ Clay Finck