Earnings
Encyclopedia
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
-- earnings before interest and taxes, EBITDA
- earnings before interest, taxes, depreciation, and amortization.
Many alternative terms for earnings are in common use, such as income
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 uses the term profit to describe earnings, whereas for the corporation the profit it reports is the amount left after tax
es are taken out. Many economic discussions use principles derived from Karl Marx
and Adam Smith
. However the rise of the importance of intellectual capital
affects such analyses.
-based earnings are those that can be achieved by application of assets that are those that can be achieved by any business that employs sufficient capital
and manpower. These conditions are commonly assumed in economic analyses of profit (economics)
generates non-routine profits. Those are often an order-of-magnitude greater than routine earnings. Non-routine profits are essential to warrant the high investment
s needed for high-technology industries.
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
's operation. Earnings is also the amount on which corporate tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
is due. For an analysis of specific aspects of corporate operations several more specific terms are used as EBIT
EBIT
EBIT may refer to:*EBIT, or Earnings before interest and taxes, in finance*EBIT, or Electron beam ion trap, in physics*An ebit, a two-party quantum state with quantum entanglement and the fundamental unit of bitpartite entanglement...
-- earnings before interest and taxes, EBITDA
EBITDA
EBITDA is an acronym for earnings before interest, taxes, depreciation, and amortization. It is a non-GAAP metric that is measured exactly as stated. All interest, tax, depreciation and amortization entries in the income statement are reversed out from the bottom-line net income...
- earnings before interest, taxes, depreciation, and amortization.
Many alternative terms for earnings are in common use, such as income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
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 uses the term profit to describe earnings, whereas for the corporation the profit it reports is the amount left after tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es are taken out. Many economic discussions use principles derived from Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
and Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
. However the rise of the importance of intellectual capital
Intellectual capital
The value of an enterprise is made of physical assets, various financial assets and, finally, intangible assets, i.e., intellectual capital . The term intellectual capital conventionally refers to the difference in value between tangible assets and market value. ....
affects such analyses.
Routine earnings
Routine earnings or commodityCommodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
-based earnings are those that can be achieved by application of assets that are those that can be achieved by any business that employs sufficient capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
and manpower. These conditions are commonly assumed in economic analyses of profit (economics)
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
Non-routine earnings
The use of intellectual propertyIntellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
generates non-routine profits. Those are often an order-of-magnitude greater than routine earnings. Non-routine profits are essential to warrant the high investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
s needed for high-technology industries.