Earnings are the financial gains of a company. Earnings also refers to the income that accrues to the shareholders from the activities of the company. It includes the earnings of the companies’ property and plant, equities held by the individual proprietors in the company, retained earnings, surplus cash, retained earnings per share (EPS), and other measures reported under the income statement. Many more technical terms are commonly used as EBIT and EBITDA for a study of various aspects of company operations. These technical terms are explained below.
The first term, Earnings, is the total revenues of the company divided by its total cost of doing business. It is calculated as the difference between the gross revenues less the cost of doing business per unit of revenue and net earnings per share (EPS) less net earnings per share. Earnings before expenses are referred to as pre-tax earnings. Pre-tax earnings can either be pre recorded or non-pre recorded depending on the nature of the transactions.
The second term, Income statement, indicates the revenue and cost of doing business in one transaction. The statement shows the gross amount received minus the total amount charged to the revenue account, less the cost of good sold or gifted. It also shows the gross amount earned minus the cost of goods purchased and less the revenue share. The third term, net income statement, indicates the income statement and includes the gross amount earned, less the revenue share, less the expense referred to as selling and administrative expenses.