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Earnings

• Net income for the company during the period.

• Net income for a company during a specific period, generally (but not always) referring to after-tax income.

 
 Embedded terms in definition
 Income
Net income
Net
 
 Referenced Terms
 Accounting earnings: Earnings of a firm as reported on its income statement.

 After tax: Describes funds on which an employee has already paid all income taxes, for example, amounts held outside a 401(k) plan or traditional IRA, or within a Roth IRA. Taxes on benefits derived from these funds, plus investment Earnings in a Roth IRA, are not payable when they are received. See basis. Also known as post-tax.

 Antidilutive effect: Result of a transaction that increases Earnings per common share (e.g. by decreasing the number of shares outstanding).

 Average accounting return: The average project Earnings after taxes and depreciation divided by the average book value of the investment during its life.

 Average percent payout: The average of the percentage of a company's profits paid out in dividends to shareholders, typically calculated over the last five years. A high percent payout can be a danger sign. Recent payout figures higher than 50%, and higher than the average payout, may forewarn of a dividend cut. A dividend cut would likely cause the stock price to fall. Generally, the higher the payout ratio, the lower the expected growth rate for the company's EPS in the future.
Sometimes, although the dividend payout is more than Earnings, the company has strong cash flow and can cover the dividend in the short term. However, a company paying out dividends in excess of earnings on a recurring basis is a risky investment.

 
 Related Terms
 

<< Earning power Earnings before interest and taxes >>

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