Earnings are the net benefits of a
corporation's operation. Earnings is also the amount on which corporate
tax is due. For an analysis of specific aspects of corporate operations several more specific terms are used as
EBIT EBIT, Ebit or ebit may refer to:
*EBIT, or Earnings before interest and taxes, in finance
*EBIT, or Electron beam ion trap, in physics
*An ebit (quantum state), a two-party quantum state with quantum entanglement
Quantum entanglement is the ph ...
(earnings before interest and taxes) and
EBITDA
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, pronounced , , or ) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, stat ...
(earnings before interest, taxes, depreciation, and amortization).
Many alternative terms for earnings are in common use, such as
income and
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory intere ...
. These terms in turn have a variety of definitions, depending on their context and the objectives of the authors. For instance, the
IRS uses the term profit to describe earnings, whereas for the corporation the profit it
reports is the amount left after
taxes are taken out.
Non-routine earnings
The use of
intellectual property generates non-routine profits. Those are often an order-of-magnitude greater than routine earnings.
[John Hand and Baruch Lev (editors): Intangible Assets, Values, Measures. and Risks; Oxford University Press, 2003.] Non-routine profits are essential to warrant the high
investment
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
s needed for
high-technology industries.
Earnings manipulation
Some statistical models (e.g. based on
Benford's law or
Beneish M-score) are used in order to detect possible earnings manipulations (fraud).
Citations
Business terms