Earnings Season Is Here
Earnings are the financial benefits of the operation of a company. Earnings per share (EPS) is the measure on which corporate taxes are based. Several other terms are also used as EBIT and EBITDA for an analysis of certain aspects of internal operations of the company. Many companies have accounting systems that use both methods for reporting the earnings of the company. The method adopted depends on the type of operation being examined.
There are many types of reports that come out periodically and all the reports are meant to give information about the financial performance of the company over a period of one year. All the reports are prepared after preparing the income statement, balance sheet and the statement of earnings for the last six consecutive quarters. After this information is compiled in the form of earnings reports the next step is to analyze the situation. This can be done by looking at the trends that have happened within the business. The analysis can be done for a particular quarter or for the entire year. The analysis should be done based on the trends that have been going on since the beginning of the operations of the company or a particular quarter ends.
Based on the analysis there will be a decision taken about the future plans of the company. Based on the analysis of the stock price movements for a particular period of time the future plans can be made. Earnings surprises can be used by the management for the purpose of improving the market expectations about the company and also for the purpose of selling some of their units in the company. Earnings surprises can be used for the purpose of earning higher dividends and increasing the stock price of the company.