Earnings are basically the financial benefit of the operations of a company. It essentially represents the profit a company makes after all the expenses have been deducted. Earnings per trade is the measure of earnings used in computing for taxes. Apart, from that there are many other terms used to indicate the same such as EBIT, EBITDA, and gross profit. These are basically the three major parts that make up the earning of the company. It should be clearly understood that earnings are one of the most significant and vital aspect of any business operation.
The income statement, balance sheet, and statement of earnings are calculated before deducting the expenses from the gross income. After the expenses have been subtracted earnings are calculated. Generally the income statement form includes the following sections C, D and E. The section C includes the income statement analysis of the company’s operations for the year. This section indicates the following information Net Earnings, Deficit, Positive cash flow, and Free Cash Flow. The section D includes the details about the company’s operations for the quarter.
Other sections may also be included as per the requirement of the statutory requirements. The financial statements are prepared based on the information provided in the Earnings per Share, which is the basis of determining the company’s stock price by determining the net income or profit and the dividends paid on the equity and underlying shares. This is basically the bottom line of any business and a company cannot survive unless it meets this bottom line. Therefore the Earnings must always be at par or above this to get a positive trading and therefore earn profits for the company.