Earnings are the net benefits of a

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...

's operation. Earnings is also the amount on which corporate

tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...

is due. For an analysis of specific aspects of corporate operations several more specific terms are used as EBIT (earnings before interest and taxes) and EBITDA (earnings before interest, taxes, depreciation, and amortization). Many alternative terms for earnings are in common use, such as

income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. Fo ...

and profit. These terms in turn have a variety of definitions, depending on their context and the objectives of the authors. For instance, the

IRS The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...

uses the term profit to describe earnings, whereas for the corporation the profit it

report A report is a document that presents information in an organized format for a specific audience and purpose. Although summaries of reports may be delivered orally, complete reports are almost always in the form of written documents. Usage In ...

s is the amount left after

es are taken out.

Non-routine earnings

The use of

intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...

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 investments needed for

high-technology High technology (high tech), also known as advanced technology (advanced tech) or exotechnology, is technology that is at the cutting edge: the highest form of technology available. It can be defined as either the most complex or the newest te ...

industries.

Earnings manipulation

Some statistical models (e.g. based on

Benford's law Benford's law, also known as the Newcomb–Benford law, the law of anomalous numbers, or the first-digit law, is an observation that in many real-life sets of numerical data, the leading digit is likely to be small.Arno Berger and Theodore ...

Beneish M-score The Beneish model is a statistical model that uses financial ratios calculated with accounting data of a specific company in order to check if it is likely (high probability) that the reported earnings of the company have been manipulated. How to ...

) are used in order to detect possible earnings manipulations (fraud).

Citations

Business terms