{{Short description, Financial term
Earnings are the net benefits of a
corporation
A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...
's operation. Earnings is also the amount on which corporate
tax
A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...
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's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, pronounced ) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandat ...
(earnings before interest, taxes, depreciation, and amortization).
Many alternative terms for earnings are in common use, such as
income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. F ...
and
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory inter ...
. 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 for the Federal government of the United States, United States federal government, which is responsible for collecting Taxation in the United States, U.S. federal taxes and administerin ...
uses the term profit to describe earnings, whereas for the corporation the profit it
report
A report is a document or a statement that presents information in an organized format for a specific audience and purpose. Although summaries of reports may be delivered orally, complete reports are usually given in the form of written documen ...
s is the amount left after
tax
A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...
es are taken out.
Non-routine earnings
The use of
intellectual property
Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
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 traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...