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Earnings Quality Analysis

Evaluate the sustainability of reported earnings using accruals ratios, cash conversion, working capital efficiency, and earnings persistence. Companies with cash-backed earnings tend to sustain dividends and deliver more reliable valuations.

Companies Scored

128

of 132

Excellent

Score ≥ 80

Good

Score 60–79

Fair

Score 40–59

Weak

Score < 40

High Accrual

Accrual burden

Earnings Quality Scores (128 companies)

Ticker	Company	Sector	EQ Score	Rating	Accruals %	Cash Conv	Cash Quality	Components	Confidence
FCG	Fonterra Co-operative Group Limited	Consumer Staples	96	Excellent	-5151.3%	1.82x	strong	25/25/20/16/10	high
LIC	Livestock Improvement Corporation Limited	Financials	96	Excellent	-6.9%	1.84x	strong	25/25/20/16/10	high

Data sourced from publicly available NZX filings and annual reports. Our datasets may not be complete. Automated analysis can produce errors. Scores are calculated using disclosed methodology and are analytical tools, not investment ratings or recommendations. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.

Methodology

Accruals Ratio (25pts): Total accruals (net income minus operating cash flow) divided by average total assets. Lower ratios indicate more cash-backed earnings. Negative accruals = cash earnings exceed reported profits.

Cash Conversion (25pts): Operating cash flow divided by net income. Above 1.0x indicates strong cash generation. Sector-adjusted thresholds (REITs/banks have different norms).

Working Capital (20pts): Receivables and inventory growth relative to revenue growth. Faster WC growth signals cash being tied up rather than collected.

Earnings Persistence (20pts): Profitability consistency across 3-5 years plus earnings volatility. Stable, consistent profits score higher.

Capital Intensity (10pts): Capex relative to depreciation. Adequate reinvestment (0.8-1.5x depreciation) indicates sustainable operations.

These are automated analytical scores, not investment advice. Different sectors have structurally different accrual patterns. Verify independently before making investment decisions.

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