Enter the net cash from operating activities ($) and the net income ($) into the Quality of Earnings Ratio Calculator. The calculator will evaluate and display the Quality of Earnings Ratio.

## Quality of Earnings Ratio Formula

The following formula is used to calculate the Quality of Earnings Ratio.

**QER = NCO / NI**

- Where QER is the Quality of Earnings Ratio
- NCO is the net cash from operating activities ($)
- NI is the net income ($)

## How to Calculate Quality of Earnings Ratio?

The following example problems outline how to calculate Quality of Earnings Ratio.

Example Problem #1:

- First, determine the net cash from operating activities ($).
- The net cash from operating activities ($) is given as: 1,600.

- Next, determine the net income ($).
- The net income ($) is provided as: 2,000.

- Finally, calculate the Quality of Earnings Ratio using the equation above:

QER = NCO / NI

The values given above are inserted into the equation below and the solution is calculated:

QER = 1600 / 2000 = .80

Example Problem #2:** **

For this problem, the variables required are provided below:

net cash from operating activities ($) = 500,000

net income ($) = 750,000

Test your knowledge using the equation and check your answer with the calculator above.

QER = NCO / NI** = ?**