What are Earnings?

Earnings is also know as income. If we look from a persons perspective then it makes out the total amount of money earned after his work including benefits, interests, compensations, dividends which increases the persons investment values. Now if we take a look from a corporations point of view earnings are the revenues gained during a set amount of time (like a year or a quarter of a year) and deducting costs, taxes, dividends, operating expenses.

The most studied number of a companies financial statement is the one which represents earnings. The stock value of the company is determined mostly by these figures. It shows whether the firm is or will be profitable in the future to come. This number represents the growth potential of the company and the expected dividends. On the other hand negative earnings don’t mean bad stock in every case, because sometimes fresh companies have negative or low earnings so they can grow fast and conquer a targeted market.