Quality of Earnings 101: what interviewers actually want to hear
Most candidates answer QoE with a textbook definition. TS interviewers want you to describe a bridge. Here's how to frame it.
Ask five finance students to define Quality of Earnings and you'll get five textbook paragraphs. Ask a TS senior, and you'll get a bridge.
The mental model to land on
Reported EBITDA → one-offs out → run-rate adjustments → pro-forma adjustments → Adjusted EBITDA.
That progression is the QoE schedule. Everything else — discussions of management add-backs, diligence pushback, data-room limitations — is colour on top of this skeleton.
Three things to say in the interview
- "The goal is a run-rate view." You're re-expressing the past so a buyer can underwrite the future.
- "Adjustments have a hierarchy." Non-recurring items are easier to defend than pro-forma additions. Always signal you know the difference.
- "Proof > narrative." For every adjustment, you'd want a supporting document. Name-drop trial balance, GL detail, contracts.
The trap
Candidates who talk about QoE in the abstract lose points against candidates who talk about schedules, supporting evidence and deal impact. If you only have 60 seconds, spend them on the bridge.
Want to practise on a real schedule? That's what the case library is for.