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Definition: Earnings

It is the net income from a firm’s operations. i.e. Total revenue minus the cost of goods sold other expenses and taxes in a specific period. The period may be quarterly, half-yearly or yearly.

The sole motive behind the existence of a business is “EARNINGS”. The value of a company depends on its earnings capacity. Though initially the earnings might be less due to the expansion and growth attempts by the company, but later it might be profitable. Therefore the share price of a company primarily depends on the present and future earnings of the company. It is also called as “NET INCOME” or “PROFIT AFTER TAX (PAT).”



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