This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Calculation: Sales less all Costs and expenses
Example: The Round Number CompanySales = 200; COS = 80; OpEx = 72; Finance = 8; Tax = 10 (In this example, the Adjustments cancel out) Net Income = 200 - 80 - 72 - 8 - 10 = 30 |
Earnings is the profit for the period after all costs and expenses have been paid.
The term 'Earnings' is also used higher up the Income Statement: Earnings Before Interest and Tax, Earnings before Tax.
Outside North America, Earnings is more likely to be called Profit or Net Income or Net Profit. See discussion at Operating Income.
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.