Earnings are basically the financial advantage of the operation of a company. It mainly refers to the income earned by the firm for its operation as well as the profits made during the particular year. Earnings per quarter, year or day is generally termed as EBIT or EBITDA depending upon the terms of the contract. Many more technical terms are also used such as EBIT and EBITA. In addition earnings mean total revenue, the gross profit and net profit.
The difference between EBIT and EBITA is basically the factor that influences the valuation of the corporation by the shareholders. The shareholders decide the price at which the corporation will sell its shares out to the market at an agreed date and time and this price is known as the equity value of the company. If the earnings per quarter is more than the average pay rate then the price of the equity will appreciate therefore increasing the earnings.
The corporation receives dividends either as payments of principal or interest on dividends and capital gains from disposing the stock or property. If there are no dividends declared then the corporation receives the capital gains from the selling of stock or property. These dividends are used by the shareholders to offset the loss incurred in the operation of the business. The corporation earns a living wage and therefore, it pays dividends that provide funds to support other activities of the company such as research and development, expansion and new ventures.