For a take on earnings quality, consider J.P. Morgan Chase’s 2011 third‐quarter earnings report. The company raised its quarterly earnings by almost $2 billion by using a debit valuation adjustment, allowed under accounting rules. Essentially, the market value of J.P. Morgan’s debt declined, which allowed the company to report this “gain” as a profit. Some investors view such gains as poor earnings quality, and Moody’s Investors Services removes it when evaluating a bank’s earnings.