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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 (polity), 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 ...

corporation
'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 In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act accord ...
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 A company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal personality, legal or a mixture of both, with a specific objective. Company members sh ...
(earnings before interest, taxes, depreciation, and amortization). Many alternative terms for earnings are in common use, such as
income In microeconomics, income is the Consumption (economics), consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary. Smith, Howard Irving. 190 ...
and
profit Profit may refer to: Business and law * Profit (accounting) Profit, in accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic en ...
. 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 A revenue service, revenue agency or taxation authority is a government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. ...

IRS
uses the term profit to describe earnings, whereas for the corporation the profit it
report Image:Hurt Report cover page.png, 220px, Example of a front page of a 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, comple ...
s is the amount left after
tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, interacting or interrelated elements that act accord ...
es are taken out.


Non-routine earnings

The use of
intellectual property Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of ...
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
investment Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance Finance is the study of financial institution ...

investment
s needed for
high-technology High technology (high tech) or frontier technology (frontier tech) is technology Technology ("science of craft", from Ancient Greek, Greek , ''techne'', "art, skill, cunning of hand"; and , ''wikt:-logia, -logia'') is the sum of Art techni ...
industries.


Earnings manipulation

Some statistical models (e.g. based on Benford's law or
Beneish M-score The Beneish model is a statistical model A statistical model is a mathematical model that embodies a set of statistical assumptions concerning the generation of Sample (statistics), sample data (and similar data from a larger Statistical population, ...
) are used in order to detect possible earnings manipulations (fraud).


Citations

Business terms