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Simple English definitions for legal terms
core earnings
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A quick definition of core earnings:
Core earnings refer to the income a company generates from its main business operations, without including any one-time or unusual expenses or gains. This metric is used to assess a company's ongoing profitability and financial health. Other types of earnings include gross earnings (total income before expenses), net earnings (income after expenses), and retained earnings (accumulated income after dividends are paid out). Lost earnings refer to income that a person could have earned if they had not experienced a job loss, injury, or death.
A more thorough explanation:
Core earnings refer to a company's operating earnings, which are the profits earned from its main business activities. This excludes any one-time gains or losses, such as the sale of assets or restructuring costs. It is a measure of a company's sustainable earnings and is used to evaluate its financial performance.
- A company's core earnings for the year were $10 million, which excluded a one-time gain of $2 million from the sale of a subsidiary.
- A retailer's core earnings were $500,000, which excluded the costs of closing down a few unprofitable stores.
These examples illustrate how core earnings are calculated by excluding any one-time gains or losses that are not part of a company's ongoing business operations. This provides a more accurate picture of a company's financial health and its ability to generate sustainable profits.