Earnings: The Indispensable Element Of Great Stocks
What Are Earnings?
Earnings, also called profits or net income, are what
a company makes after paying all its obligations, including
taxes. Companies often conclude their quarters at the
end of March, June, September and December, though some
companies end their quarters in different months.
Companies report their earnings in two ways: a bottom-line
total and a per-share amount. The per-share figure is
calculated by dividing the total earnings by the number
of shares outstanding. Example: XYZ Corp., with 45 million
shares, reports earnings of $35.8 million, or 80 cents
a share. The per-share amount is most relevant for investors.
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