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.
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Calculator for Earnings For a DIY Income Statement Calculator, go here. |
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.