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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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